STANDARD LARGE GENERATOR INTERCONNECTION AGREEMENT (LGIA)

Exhibit 10.21

STANDARD LARGE GENERATOR

INTERCONNECTION AGREEMENT (LGIA)

BETWEEN

ARIZONA PUBLIC SERVICE COMPANY

AND, TOGETHER,

ABITIBI CONSOLIDATED SALES CORPORATION

AND

SNOWFLAKE WHITE MOUNTAIN POWER, LLC

APS CONTRACT NO. 52023

TABLE OF CONTENTS

		Page
RECITALS			1
ARTICLE 1. DEFINITIONS			2
ARTICLE 2. EFFECTIVE DATE, TERM,, AND TERMINATION			11
2.1 Effective Date			11
2.2 Term Of Agreement			11
2.3 Termination Procedures			11
2.3.1 Written Notice			11
2.3.2 Default			11
2.4 Termination Costs			11
2.5 Disconnection			12
2.6 Survival			12
ARTICLE 3. REGULATORY FILINGS			13
3.1 F iling			13
ARTICLE 4. SCOPE OF SERVICE			13
4.1 I nterconnection Product Options			13
4.1.1 Energy Resource Interconnection Service			13
4.1.1.1 The Product			13
4.1.1.2 Transmission Delivery Service Implications			13
4.1.2 Network Resource Interconnection Service			14
4.1.2.1 The Product			14
4.1.2.2 Transmission Delivery Service Implications			14
4.2 Provision Of Service			16
4.3 Performance Standards			16
4.4 No Transmission Delivery Service			16
4.5 Interconnection Customer Provided Services			16
ARTICLE 5. INTERCONNECTION FACILITIES ENGINEERING, PROCUREMENT, & CONSTRUCTION
			16
5.1 Options			16
5.1.1 Standard Option			16
5.1.2 Alternate Option			16
5.1.3 Option to Build			17
5.1.4 Negotiated Option			17
5.2 General Conditions Applicable to Option to Build			17
5.3 Liquidated Damages			19
5.4 Power System Stabilizers			20
5.5 Equipment Procurement			20
5.6 Construction Commencement			20
5.7 W ork P rogress			21
5.8 Information Exchange			21

		Page
5.9 Limited Operation			21
5.10 Interconnection Customer’s Interconnection Facilities (‘icif’)			21
5.10.1 Interconnection Customer’s Interconnection Facility Specifications			21
5.10.2 Transmission Provider’s Review			22
5.10.3 ICIF Construction			22
5.11 Transmission Provider’s Interconnection Facilities Construction			22
5.12 Access Rights			22
5.13 Lands Of Other Property Owners			23
5.14 Permits			23
5.15 Early Construction of Base Case Facilities			23
5.16 suspension			23
5.17 Taxes			24
5.17.1 Interconnection Customer Payments Not Taxable			24
5.17.2 Representations and Covenants			24
5.17.3 Indemnification for the Cost Consequences of Current Tax Liability Imposed Upon the Transmission Provider			25
5.17.4 Tax Gross-Up Amount			25
5.17.5 Private Letter Ruling or Change or Clarification of Law			26
5.17.6 Subsequent Taxable Events			27
5.17.7 Contests			27
5.17.8 Refund			28
5.17.9 Taxes Other Than Income Taxes			29
5.17.10 Transmission Owners Who Are Not Transmission Providers			29
5.18 Tax Status			29
5.19 Modification			29
5.19.1 General			29
5.19.2 Standards			30
5.19.3 Modification Costs			30
ARTICLE 6. TESTING AND INSPECTION			30
6.1 Pre-Commercial Operation Date Testing And Modifications			30
6.2 Post-Commercial Operation Date Testing And Modifications			30
6.3 Right To Observe Testing			31
6.4 Right To Inspect			31
ARTICLE 7. METERING			31
7.1 General			31
7.2 Check Meters			31
7.3 Standards			31
7.4 Testing Of Metering Equipment			32
7.5 Metering Data			32
ARTICLE 8. COMMUNICATIONS			32
8.1 Interconnection Customer Obligations			32
8.2 Remote Terminal Unit			32
8.3 No Annexation			33

		Page
ARTICLE 9. OPERATIONS			33
9.1 General			33
9.2 Control Area Notification			33
9.3 Transmission Provider Obligations			33
9.4 Interconnection Customer Obligations			33
9.5 Start-Up And Synchronization			34
9.6 Reactive Power			34
9.6.1 Power Factor Design Criteria			34
9.6.2 Voltage Schedules			34
9.6.2.1 Governors and Regulators			34
9.6.3 Payment for Reactive Power			35
9.7 Outages And Interruptions			35
9.7.1 Outages			35
9.7.1.1 Outage Authority and Coordination			35
9.7.1.2 Outage Schedules			35
9.7.1.3 Outage Restoration			36
9.7.2 Interruption of Service			36
9.7.3 Under-Frequency and Over Frequency Conditions			37
9.7.4 System Protection and Other Control Requirements			37
9.7.4.1 System Protection Facilities			37
9.7.5 Requirements for Protection			38
9.7.6 Power Quality			38
9.8 Switching And Tagging Rules			39
9.9 Use Of Interconnection Facilities By Third Parties			39
9.9.1 Purpose of Interconnection Facilities			39
9.9.2 Third Party Users			39
9.10 Disturbance Analysis Data Exchange			39
ARTICLE 10. MAINTENANCE			40
10.1 Transmission Provider Obligations			40
10.2 Interconnection Customer Obligations			40
10.3 Coordination			40
10.4 Secondary Systems			40
10.5 Operating And Maintenance Expenses			40
ARTICLE 11. PERFORMANCE OBLIGATION			40
11.1 Interconnection Customer Interconnection Facilities			40
11.2 Transmission Provider’s Interconnection Facilities			40
11.3 Network Upgrades And Distribution Upgrades			41
11.4 Transmission Credits			41
11.4.1 Repayment of Amounts Advanced for Network Upgrades			41
11.5 Provision Of Security			42
11.6 Interconnection Customer Compensation			43
11.6.1 Interconnection Customer Compensation for Actions During Emergency Condition 43
ARTICLE 12. INVOICE			43

		Page
12.1 General			43
12.2 Final Invoice			43
12.3 Payment			44
12.4 Disputes			44
ARTICLE 13. EMERGENCIES			44
13.1 Definition			44
13.2 Obligations			44
13.3 Notice			44
13.4 Immediate Action			45
13.5 Transmission Provider Authority			45
13.5.1 General			45
13.5.2 Reduction and Disconnection			45
13.6 Interconnection Customer Authority			46
13.7 Limited Liability			46
ARTICLE 14. REGULATORY REQUIREMENTS AND GOVERNING LAW			46
14.1 Regulatory Requirements			46
14.2 Governing Law			47
ARTICLE 15. NOTICES			47
15.1 General			47
15.2 B illings and P ayments			47
15.3 Alternative Forms of Notice			47
15.4 Operations and Maintenance Notice			47
ARTICLE 16. FORCE MAJEURE			47
ARTICLE 17. DEFAULT			48
17.1 Default			48
17.1.1 General			48
17.1.2 Right to Terminate			48
ARTICLE 18. INDEMNITY, CONSEQUENTIAL DAMAGES AND INSURANCE			48
18.1 Indemnity			48
18.1.1 Indemnified Person			49
18.1.2 Indemnifying Party			49
18.1.3 Indemnity Procedures			49
18.2 Consequential Damages			50
18.3 Insurance			50
ARTICLE 19. ASSIGNMENT			52
ARTICLE 20. SEVERABILITY			52
ARTICLE 21. COMPARABILITY			52
ARTICLE 22. CONFIDENTIALITY			53
22.1 Confidentiality			53
22.1.1 Term			53

		Page
22.1.2 Scope			53
22.1.3 Release of Confidential Information			53
22.1.4 Rights			54
22.1.5 No Warranties			54
22.1.6 Standard of Care			54
22.1.7 Order of Disclosure			54
22.1.8 Termination of Agreement			54
22.1.9 Remedies			55
22.1.10 Disclosure to FERC, its Staff, or a State			55
ARTICLE 23. ENVIRONMENTAL RELEASES			56
ARTICLE 24. INFORMATION REQUIREMENTS			56
24.1 Information Acquisition			56
24.2 Information Submission by Transmission Provider			56
24.3 Updated Information Submission by Interconnection Customer			56
24.4 Information Supplementation			57
ARTICLE 25. INFORMATION ACCESS AND AUDIT RIGHTS			58
25.1 Information Access			58
25.2 Reporting of Non-Force Majeure Events			58
25.3 Audit Rights			58
25.4 Audit Rights Periods			58
25.4.1 Audit Rights Period for Construction-Related Accounts and Records			58
25.4.2 Audit Rights Period for All Other Accounts and Records			58
25.5 Audit Results			59
ARTICLE 26. SUBCONTRACTORS			59
26.1 General			59
26.2 Responsibility of Principal			59
26.3 No Limitation by Insurance			59
ARTICLE 27. DISPUTES			59
27.1 Submission			59
27.2 External Arbitration Procedures			60
27.3 Arbitration Decisions			60
27.4 Costs			60
ARTICLE 28. REPRESENTATIONS, WARRANTIES, AND COVENANTS			60
28.1 General			60
28.1.1 Good Standing			60
28.1.2 Authority			61
28.1.3 No Conflict			61
28.1.4 Consent and Approval			61
ARTICLE 29. JOINT OPERATING COMMITTEE			61
ARTICLE 30. MISCELLANEOUS			62
30.1 Binding Effect			62

		Page
30.2 Conflicts			62
30.3 Rules of Interpretation			62
30.4 Entire Agreement			63
30.5 No Third Party Beneficiaries			63
30.6 Waiver			63
30.7 Headings			63
30.8 Multiple Counterparts			63
30.9 Amendment			63
30.10 Modification by the Parties			63
30.11 Reservation of Rights			64
30.12 No Partnership			64

Appendix A – Interconnection Facilities, Network Upgrades, and Distribution Upgrades

Appendix B – Milestones

Appendix C – Interconnection Details

Appendix D – Security Arrangements Details

Appendix E – Commercial Operation Date

Appendix F – Addresses for Delivery of Notices and Billings

Appendix G – Requirements of a Wind Generating Plant

Appendix H – Reliability Management System Agreement

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

STANDARD LARGE GENERATOR INTERCONNECTION AGREEMENT

      THIS STANDARD LARGE GENERATOR INTERCONNECTION AGREEMENT (“Agreement”) is made and entered into this 1st day of November 2006, by and between Abitibi Consolidated Sales Corporation (“Abitibi”), a corporation organized and existing under the laws of the State of Delaware, and Snowflake White Mountain Power, LLC (“Snowflake”), a corporation organized and existing under the laws of the State of Arizona (collectively, the “Interconnection Customer” with a Large Generating Facility), and Arizona Public Service Company (“APS”), a corporation organized and existing under the laws of the State of Arizona (“Transmission Provider and/or Transmission Owner”). Abitibi and Snowflake hereby agree to be jointly and severally responsible for all rights and obligations attributed to the Interconnection Customer as such are set forth in this Agreement. Interconnection Customer and Transmission Provider each may be referred to as a “Party” or collectively as the “Parties.”

Recitals

      WHEREAS, APS, as Transmission Provider operates the Transmission System; and

      WHEREAS, Abitibi and APS are parties to a grandfathered Interconnection and Operating Agreement (“IOA”) that provides Interconnection Service to Abitibi Unit #1 and Unit #2;

      WHEREAS, such preexisting IOA was filed with FERC on October 8, 2002, in Docket No. ER03-22-000, was accepted by FERC as effective on September 9, 2002, via letter order issued on December 6, 2002, and is designated as APS Contract No. 51637;

      WHEREAS, Abitibi and APS intend for this Agreement to fully replace and supersede the IOA upon its Effective Date;

      WHEREAS, Snowflake intends to construct and own a 22 MW Generating Facility on Abitibi’s property and shall utilize the pre-existing Point of Interconnection with the Transmission System to provide Interconnection Service to such new Generating Facility;

      WHEREAS, Abitibi and Snowflake have entered into a Lease Agreement dated September 14, 2005 that grants Snowflake access and use rights over Abitibi’s Interconnection Facilities in order for Snowflake to obtain Interconnection Service with the Transmission System;

      WHEREAS, pursuant to the Operations Provisions that are included as Addendum 1 to the Lease Agreement dated September 14, 2005, Abitibi shall be responsible for the operations of the three Generating Facilities to be interconnected to the Transmission System at a singular Point of Interconnection pursuant to this Agreement;

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

      WHEREAS, this Agreement shall be considered a “Facility Agreement,” as such term is defined in the Operations Provisions addendum to the Lease Agreement dated September 14, 2005;

      WHEREAS, Interconnection Customer intends to own, lease and/or control and operate the Generating Facility identified as a Large Generating Facility in Appendix C to this Agreement; and,

      WHEREAS, Interconnection Customer and Transmission Provider have agreed to enter into this Agreement for the purpose of interconnecting the Large Generating Facility with the Transmission System;

      NOW, THEREFORE, in consideration of and subject to the mutual covenants contained herein, it is agreed:

     When used in this Standard Large Generator Interconnection Agreement, terms with initial capitalization that are not defined in Article 1 shall have the meanings specified in the Article in which they are used or the Open Access Transmission Tariff (Tariff).

Article 1. Definitions

      Adverse System Impact shall mean the negative effects due to technical or operational limits on conductors or equipment being exceeded that may compromise the safety and reliability of the electric system.

      Affected System shall mean an electric system other than the Transmission Provider’s Transmission System that may be affected by the proposed interconnection.

      Affected System Operator shall mean the entity that operates an Affected System.

      Affiliate shall mean, with respect to a corporation, partnership or other entity, each such other corporation, partnership or other entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such corporation, partnership or other entity.

      Ancillary Services shall mean those services that are necessary to support the transmission of capacity and energy from resources to loads while maintaining reliable operation of the Transmission Provider’s Transmission System in accordance with Good Utility Practice.

      Applicable Laws and Regulations shall mean all duly promulgated applicable federal, state and local laws, regulations, rules, ordinances, codes, decrees, judgments, directives, or judicial or administrative orders, permits and other duly authorized actions of any Governmental Authority.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

      Applicable Reliability Council shall mean the reliability council applicable to the Transmission System to which the Generating Facility is directly interconnected.

      Applicable Reliability Standards shall mean the requirements and guidelines of NERC, the Applicable Reliability Council, and the Control Area of the Transmission System to which the Generating Facility is directly interconnected.

      Base Case shall mean the base case power flow, short circuit, and stability data bases used for the Interconnection Studies by the Transmission Provider or Interconnection Customer.

      Breach shall mean the failure of a Party to perform or observe any material term or condition of the Standard Large Generator Interconnection Agreement.

      Breaching Party shall mean a Party that is in Breach of the Standard Large Generator Interconnection Agreement.

      Business Day shall mean Monday through Friday, excluding Federal Holidays.

      Calendar Day shall mean any day including Saturday, Sunday or a Federal Holiday.

      Clustering shall mean the process whereby a group of Interconnection Requests is studied together, instead of serially, for the purpose of conducting the Interconnection System Impact Study.

      Commercial Operation shall mean the status of a Generating Facility that has commenced generating electricity for sale, excluding electricity generated during Trial Operation.

      Commercial Operation Date of a unit shall mean the date on which the Generating Facility commences Commercial Operation as agreed to by the Parties pursuant to Appendix E to the Standard Large Generator Interconnection Agreement.

      Confidential Information shall mean any confidential, proprietary or trade secret information of a plan, specification, pattern, procedure, design, device, list, concept, policy or compilation relating to the present or planned business of a Party, which is designated as confidential by the Party supplying the information, whether conveyed orally, electronically, in writing, through inspection, or otherwise.

      Control Area shall mean an electrical system or systems bounded by interconnection metering and telemetry, capable of controlling generation to maintain its interchange schedule with other Control Areas and contributing to frequency regulation of the interconnection. A Control Area must be certified by the Applicable Reliability Council.

      Default shall mean the failure of a Breaching Party to cure its Breach in accordance with Article 17 of the Standard Large Generator Interconnection Agreement.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

      Dispute Resolution shall mean the procedure for resolution of a dispute between the Parties in which they will first attempt to resolve the dispute on an informal basis.

      Distribution System shall mean the Transmission Provider’s facilities and equipment used to transmit electricity to ultimate usage points such as homes and industries directly from nearby generators or from interchanges with higher voltage transmission networks which transport bulk power over longer distances. The voltage levels at which distribution systems operate differ among areas.

      Distribution Upgrades shall mean the additions, modifications, and upgrades to the Transmission Provider’s Distribution System at or beyond the Point of Interconnection to facilitate interconnection of the Generating Facility and render the transmission service necessary to effect Interconnection Customer’s wholesale sale of electricity in interstate commerce. Distribution Upgrades do not include Interconnection Facilities.

      Effective Date shall mean the date on which the Standard Large Generator Interconnection Agreement becomes effective upon execution by the Parties subject to acceptance by FERC, or if filed unexecuted, upon the date specified by FERC.

      Emergency Condition shall mean a condition or situation: (1) that in the judgment of the Party making the claim is imminently likely to endanger life or property; or (2) that, in the case of a Transmission Provider, is imminently likely (as determined in a non-discriminatory manner) to cause a material adverse effect on the security of, or damage to Transmission Provider’s Transmission System, Transmission Provider’s Interconnection Facilities or the electric systems of others to which the Transmission Provider’s Transmission System is directly connected; or (3) that, in the case of Interconnection Customer, is imminently likely (as determined in a non-discriminatory manner) to cause a material adverse effect on the security of, or damage to, the Generating Facility or Interconnection Customer’s Interconnection Facilities. System restoration and black start shall be considered Emergency Conditions; provided, that Interconnection Customer is not obligated by the Standard Large Generator Interconnection Agreement to possess black start capability.

      Energy Resource Interconnection Service shall mean an Interconnection Service that allows the Interconnection Customer to connect its Generating Facility to the Transmission Provider’s Transmission System to be eligible to deliver the Generating Facility’s electric output using the existing firm or nonfirm capacity of the Transmission Provider’s Transmission System on an as available basis. Energy Resource Interconnection Service in and of itself does not convey transmission service.

      Engineering & Procurement (E&P) Agreement shall mean an agreement that authorizes the Transmission Provider to begin engineering and procurement of long lead-time items necessary for the establishment of the interconnection in order to advance the implementation of the Interconnection Request.

      Environmental Law shall mean Applicable Laws or Regulations relating to pollution or protection of the environment or natural resources.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

      Federal Power Act shall mean the Federal Power Act, as amended, 16 U.S.C. §§ 791a et seq.

      FERC shall mean the Federal Energy Regulatory Commission (Commission) or its successor.

      Force Majeure shall mean any act of God, labor disturbance, act of the public enemy, war, insurrection, riot, fire, storm or flood, explosion, breakage or accident to machinery or equipment, any order, regulation or restriction imposed by governmental, military or lawfully established civilian authorities, or any other cause beyond a Party’s control. A Force Majeure event does not include acts of negligence or intentional wrongdoing by the Party claiming Force Majeure.

      Generating Facility shall mean Interconnection Customer’s device for the production of electricity identified in the Interconnection Request, but shall not include the Interconnection Customer’s Interconnection Facilities.

      Generating Facility Capacity shall mean the net capacity of the Generating Facility and the aggregate net capacity of the Generating Facility where it includes multiple energy production devices.

      Good Utility Practice shall mean any of the practices, methods and acts engaged in or approved by a significant portion of the electric industry during the relevant time period, or any of the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Good Utility Practice is not intended to be limited to the optimum practice, method, or act to the exclusion of all others, but rather to be acceptable practices, methods, or acts generally accepted in the region.

      Governmental Authority shall mean any federal, state, local or other governmental regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, tribunal, or other governmental authority having jurisdiction over the Parties, their respective facilities, or the respective services they provide, and exercising or entitled to exercise any administrative, executive, police, or taxing authority or power; provided, however, that such term does not include Interconnection Customer, Transmission Provider, or any Affiliate thereof.

      Hazardous Substances shall mean any chemicals, materials or substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “hazardous constituents,” “restricted hazardous materials,” “extremely hazardous substances,” “toxic substances,” “radioactive substances,” “contaminants,” “pollutants,” “toxic pollutants” or words of similar meaning and regulatory effect under any applicable Environmental Law, or any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any applicable Environmental Law.

      Initial Synchronization Date shall mean the date upon which the Generating Facility is initially synchronized and upon which Trial Operation begins.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

      In-Service Date shall mean the date upon which the Interconnection Customer reasonably expects it will be ready to begin use of the Transmission Provider’s Interconnection Facilities to obtain back feed power.

      Interconnection Customer shall mean any entity, including the Transmission Provider, Transmission Owner or any of the Affiliates or subsidiaries of either, that proposes to interconnect its Generating Facility with the Transmission Provider’s Transmission System.

      Interconnection Customer’s Interconnection Facilities shall mean all facilities and equipment, as identified in Appendix A of the Standard Large Generator Interconnection Agreement, that are located between the Generating Facility and the Point of Change of Ownership, including any modification, addition, or upgrades to such facilities and equipment necessary to physically and electrically interconnect the Generating Facility to the Transmission Provider’s Transmission System. Interconnection Customer’s Interconnection Facilities are sole use facilities.

      Interconnection Facilities shall mean the Transmission Provider’s Interconnection Facilities and the Interconnection Customer’s Interconnection Facilities. Collectively, Interconnection Facilities include all facilities and equipment between the Generating Facility and the Point of Interconnection, including any modification, additions or upgrades that are necessary to physically and electrically interconnect the Generating Facility to the Transmission Provider’s Transmission System. Interconnection Facilities are sole use facilities and shall not include Distribution Upgrades, Stand Alone Network Upgrades or Network Upgrades.

      Interconnection Facilities Study shall mean a study conducted by the Transmission Provider or a third party consultant for the Interconnection Customer to determine a list of facilities (including Transmission Provider’s Interconnection Facilities and Network Upgrades as identified in the Interconnection System Impact Study), the cost of those facilities, and the time required to interconnect the Generating Facility with the Transmission Provider’s Transmission System. The scope of the study is defined in Section 8 of the Standard Large Generator Interconnection Procedures.

      Interconnection Facilities Study Agreement shall mean the form of agreement contained in Appendix 4 of the Standard Large Generator Interconnection Procedures for conducting the Interconnection Facilities Study.

      Interconnection Feasibility Study shall mean a preliminary evaluation of the system impact and cost of interconnecting the Generating Facility to the Transmission Provider’s Transmission System, the scope of which is described in Section 6 of the Standard Large Generator Interconnection Procedures.

      Interconnection Feasibility Study Agreement shall mean the form of agreement contained in Appendix 2 of the Standard Large Generator Interconnection Procedures for conducting the Interconnection Feasibility Study.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

      Interconnection Request shall mean an Interconnection Customer’s request, in the form of Appendix 1 to the Standard Large Generator Interconnection Procedures, in accordance with the Tariff, to interconnect a new Generating Facility, or to increase the capacity of, or make a Material Modification to the operating characteristics of, an existing Generating Facility that is interconnected with the Transmission Provider’s Transmission System.

      Interconnection Service shall mean the service provided by the Transmission Provider associated with interconnecting the Interconnection Customer’s Generating Facility to the Transmission Provider’s Transmission System and enabling it to receive electric energy and capacity from the Generating Facility at the Point of Interconnection, pursuant to the terms of the Standard Large Generator Interconnection Agreement and, if applicable, the Transmission Provider’s Tariff.

      Interconnection Study shall mean any of the following studies: the Interconnection Feasibility Study, the Interconnection System Impact Study, and the Interconnection Facilities Study described in the Standard Large Generator Interconnection Procedures.

      Interconnection System Impact Study shall mean an engineering study that evaluates the impact of the proposed interconnection on the safety and reliability of Transmission Provider’s Transmission System and, if applicable, an Affected System. The study shall identify and detail the system impacts that would result if the Generating Facility were interconnected without project modifications or system modifications, focusing on the Adverse System Impacts identified in the Interconnection Feasibility Study, or to study potential impacts, including but not limited to those identified in the Scoping Meeting as described in the Standard Large Generator Interconnection Procedures.

      Interconnection System Impact Study Agreement shall mean the form of agreement contained in Appendix 3 of the Standard Large Generator Interconnection Procedures for conducting the Interconnection System Impact Study.

      IRS shall mean the Internal Revenue Service.

      Joint Operating Committee shall be a group made up of representatives from Interconnection Customers and the Transmission Provider to coordinate operating and technical considerations of Interconnection Service.

      Large Generating Facility shall mean a Generating Facility having a Generating Facility Capacity of more than 20 MW.

      Loss shall mean any and all losses relating to injury to or death of any person or damage to property, demand, suits, recoveries, costs and expenses, court costs, attorney fees, and all other obligations by or to third parties, arising out of or resulting from the other Party’s performance, or non-performance of its obligations under the Standard Large Generator Interconnection Agreement on behalf

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

of the indemnifying Party, except in cases of gross negligence or intentional wrongdoing by the indemnifying Party.

      Material Modification shall mean those modifications that have a material impact on the cost or timing of any Interconnection Request with a later queue priority date.

      Metering Equipment shall mean all metering equipment installed or to be installed at the Generating Facility pursuant to the Standard Large Generator Interconnection Agreement at the metering points, including but not limited to instrument transformers, MWh-meters, data acquisition equipment, transducers, remote terminal unit, communications equipment, phone lines, and fiber optics.

      NERC shall mean the North American Electric Reliability Council or its successor organization.

      Network Resource shall mean any designated generating resource owned, purchased, or leased by a Network Customer under the Network Integration Transmission Service Tariff. Network Resources do not include any resource, or any portion thereof, that is committed for sale to third parties or otherwise cannot be called upon to meet the Network Customer’s Network Load on a non-interruptible basis.

      Network Resource Interconnection Service shall mean an Interconnection Service that allows the Interconnection Customer to integrate its Large Generating Facility with the Transmission Provider’s Transmission System (1) in a manner comparable to that in which the Transmission Provider integrates its generating facilities to serve native load customers; or (2) in an RTO or ISO with market based congestion management, in the same manner as Network Resources. Network Resource Interconnection Service in and of itself does not convey transmission service.

      Network Upgrades shall mean the additions, modifications, and upgrades to the Transmission Provider’s Transmission System required at or beyond the point at which the Interconnection Facilities connect to the Transmission Provider’s Transmission System to accommodate the interconnection of the Large Generating Facility to the Transmission Provider’s Transmission System.

      Notice of Dispute shall mean a written notice of a dispute or claim that arises out of or in connection with the Standard Large Generator Interconnection Agreement or its performance.

      Optional Interconnection Study shall mean a sensitivity analysis based on assumptions specified by the Interconnection Customer in the Optional Interconnection Study Agreement.

      Optional Interconnection Study Agreement shall mean the form of agreement contained in Appendix 5 of the Standard Large Generator Interconnection Procedures for conducting the Optional Interconnection Study.

      Party or Parties shall mean Transmission Provider, Transmission Owner, Interconnection Customer or any combination of the above.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

      Point of Change of Ownership shall mean the point, as set forth in Appendix A to the Standard Large Generator Interconnection Agreement, where the Interconnection Customer’s Interconnection Facilities connect to the Transmission Provider’s Interconnection Facilities.

      Point of Interconnection shall mean the point, as set forth in Appendix A to the Standard Large Generator Interconnection Agreement, where the Interconnection Facilities connect to the Transmission Provider’s Transmission System.

      Queue Position shall mean the order of a valid Interconnection Request, relative to all other pending valid Interconnection Requests, that is established based upon the date and time of receipt of the valid Interconnection Request by the Transmission Provider.

      Reasonable Efforts shall mean, with respect to an action required to be attempted or taken by a Party under the Standard Large Generator Interconnection Agreement, efforts that are timely and consistent with Good Utility Practice and are otherwise substantially equivalent to those a Party would use to protect its own interests.

      Scoping Meeting shall mean the meeting between representatives of the Interconnection Customer and Transmission Provider conducted for the purpose of discussing alternative interconnection options, to exchange information including any transmission data and earlier study evaluations that would be reasonably expected to impact such interconnection options, to analyze such information, and to determine the potential feasible Points of Interconnection.

      Site Control shall mean documentation reasonably demonstrating: (1) ownership of, a leasehold interest in, or a right to develop a site for the purpose of constructing the Generating Facility; (2) an option to purchase or acquire a leasehold site for such purpose; or (3) an exclusivity or other business relationship between Interconnection Customer and the entity having the right to sell, lease or grant Interconnection Customer the right to possess or occupy a site for such purpose.

      Small Generating Facility shall mean a Generating Facility that has a Generating Facility Capacity of no more than 20 MW.

      Stand Alone Network Upgrades shall mean Network Upgrades that an Interconnection Customer may construct without affecting day-to-day operations of the Transmission System during their construction. Both the Transmission Provider and the Interconnection Customer must agree as to what constitutes Stand Alone Network Upgrades and identify them in Appendix A to the Standard Large Generator Interconnection Agreement.

      Standard Large Generator Interconnection Agreement (LGIA) shall mean the form of interconnection agreement applicable to an Interconnection Request pertaining to a Large Generating Facility that is included in the Transmission Provider’s Tariff.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

      Standard Large Generator Interconnection Procedures (LGIP) shall mean the interconnection procedures applicable to an Interconnection Request pertaining to a Large Generating Facility that are included in the Transmission Provider’s Tariff.

      System Protection Facilities shall mean the equipment, including necessary protection signal communications equipment, required to protect (1) the Transmission Provider’s Transmission System from faults or other electrical disturbances occurring at the Generating Facility and (2) the Generating Facility from faults or other electrical system disturbances occurring on the Transmission Provider’s Transmission System or on other delivery systems or other generating systems to which the Transmission Provider’s Transmission System is directly connected.

      Tariff shall mean the Transmission Provider’s Tariff through which open access transmission service and Interconnection Service are offered, as filed with FERC, and as amended or supplemented from time to time, or any successor tariff.

      Transmission Owner shall mean an entity that owns, leases or otherwise possesses an interest in the portion of the Transmission System at the Point of Interconnection and may be a Party to the Standard Large Generator Interconnection Agreement to the extent necessary.

      Transmission Provider shall mean the public utility (or its designated agent) that owns, controls, or operates transmission or distribution facilities used for the transmission of electricity in interstate commerce and provides transmission service under the Tariff. The term Transmission Provider should be read to include the Transmission Owner when the Transmission Owner is separate from the Transmission Provider.

      Transmission Provider’s Interconnection Facilities shall mean all facilities and equipment owned, controlled or operated by the Transmission Provider from the Point of Change of Ownership to the Point of Interconnection as identified in Appendix A to the Standard Large Generator Interconnection Agreement, including any modifications, additions or upgrades to such facilities and equipment. Transmission Provider’s Interconnection Facilities are sole use facilities and shall not include Distribution Upgrades, Stand Alone Network Upgrades or Network Upgrades.

      Transmission System shall mean the facilities owned, controlled or operated by the Transmission Provider or Transmission Owner that are used to provide transmission service under the Tariff.

      Trial Operation shall mean the period during which Interconnection Customer is engaged in on-site test operations and commissioning of the Generating Facility prior to Commercial Operation.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

Article 2. Effective Date, Term, and Termination

2.1		Effective Date. This LGIA shall become effective upon execution by the Parties subject to acceptance by FERC (if applicable), or if filed unexecuted, upon the date specified by FERC. Transmission Provider shall promptly file this LGIA with FERC upon execution in accordance with Article 3.1, if required.
2.2		Term of Agreement. Subject to the provisions of Article 2.3, this LGIA shall remain in effect for a period of ten (10) years from the Effective Date or such other longer period as Interconnection Customer may request and shall be automatically renewed for each successive one-year period thereafter. Provided, however, that if the Interconnection Customer’s Lease Agreement dated September 14, 2005 or the Operations Provisions, thereto, are set to terminate or otherwise cease to be effective, Interconnection Customer shall process such termination consistent with Article 2.3.1 unless Transmission Provider and Interconnection Customer can mutually agree upon the amendments and/or modifications necessary to retain this Agreement as effective given such change in circumstances.
2.3		Termination Procedures.

	2.3.1		Written Notice . This LGIA may be terminated by Interconnection Customer after giving Transmission Provider ninety (90) Calendar Days advance written notice, or by Transmission Provider notifying FERC after the Generating Facility permanently ceases Commercial Operation.
	2.3.2		Default . Either Party may terminate this LGIA in accordance with Article 17.
	2.3.3		Notwithstanding Articles 2.3.1 and 2.3.2, no termination shall become effective until the Parties have complied with all Applicable Laws and Regulations applicable to such termination, including the filing with FERC of a notice of termination of this LGIA, which notice has been accepted for filing by FERC.

2.4

Termination Costs. If a Party elects to terminate this Agreement pursuant to Article 2.3 above, each Party shall pay all costs incurred (including any cancellation costs relating to orders or contracts for Interconnection Facilities and equipment) or charges assessed by the other Party, as of the date of the other Party’s receipt of such notice of termination, that are the responsibility of the Terminating Party under this LGIA. In the event of termination by a Party, the Parties shall use commercially Reasonable Efforts to mitigate the costs, damages and charges arising as a consequence of termination. Upon termination of this LGIA, unless otherwise ordered or approved by FERC:

2.4.1

With respect to any portion of Transmission Provider’s Interconnection Facilities that have not yet been constructed or installed, Transmission Provider shall to the extent possible and with Interconnection Customer’s authorization cancel any pending orders of,

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

			or return, any materials or equipment for, or contracts for construction of, such facilities; provided that in the event Interconnection Customer elects not to authorize such cancellation, Interconnection Customer shall assume all payment obligations with respect to such materials, equipment, and contracts, and Transmission Provider shall deliver such material and equipment, and, if necessary, assign such contracts, to Interconnection Customer as soon as practicable, at Interconnection Customer’s expense. To the extent that Interconnection Customer has already paid Transmission Provider for any or all such costs of materials or equipment not taken by Interconnection Customer, Transmission Provider shall promptly refund such amounts to Interconnection Customer, less any costs, including penalties incurred by Transmission Provider to cancel any pending orders of or return such materials, equipment, or contracts.
			If an Interconnection Customer terminates this LGIA, it shall be responsible for all costs incurred in association with that Interconnection Customer’s interconnection, including any cancellation costs relating to orders or contracts for Interconnection Facilities and equipment, and other expenses including any Network Upgrades for which Transmission Provider has incurred expenses and has not been reimbursed by Interconnection Customer.
	2.4.2		Transmission Provider may, at its option, retain any portion of such materials, equipment, or facilities that Interconnection Customer chooses not to accept delivery of, in which case Transmission Provider shall be responsible for all costs associated with procuring such materials, equipment, or facilities.
	2.4.3		With respect to any portion of the Interconnection Facilities, and any other facilities already installed or constructed pursuant to the terms of this LGIA, Interconnection Customer shall be responsible for all costs associated with the removal, relocation or other disposition or retirement of such materials, equipment, or facilities.

2.5		Disconnection . Upon termination of this LGIA, the Parties will take all appropriate steps to disconnect the Large Generating Facility from the Transmission System. All costs required to effectuate such disconnection shall be borne by the terminating Party, unless such termination resulted from the non-terminating Party’s Default of this LGIA or such non-terminating Party otherwise is responsible for these costs under this LGIA.
2.6		Survival . This LGIA shall continue in effect after termination to the extent necessary to provide for final billings and payments and for costs incurred hereunder, including billings and payments pursuant to this LGIA; to permit the determination and enforcement of liability and indemnification obligations arising from acts or events that occurred while this LGIA was in effect; and to permit each Party to have access to the lands of the other Party pursuant to this LGIA or other applicable agreements, to disconnect, remove or salvage its own facilities and equipment.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

Article 3. Regulatory Filings

3.1

Filing . Transmission Provider shall file this LGIA (and any amendment hereto) with the appropriate Governmental Authority, if required. Interconnection Customer may request that any information so provided be subject to the confidentiality provisions of Article 22. If Interconnection Customer has executed this LGIA, or any amendment thereto, Interconnection Customer shall reasonably cooperate with Transmission Provider with respect to such filing and to provide any information reasonably requested by Transmission Provider needed to comply with applicable regulatory requirements.

Article 4. Scope of Service

4.1

Interconnection Product Options . Interconnection Customer has selected the following (checked) type of Interconnection Service:

4.1.1

Energy Resource Interconnection Service.

	4.1.1.1		The Product . Energy Resource Interconnection Service allows Interconnection Customer to connect the Large Generating Facility to the Transmission System and be eligible to deliver the Large Generating Facility’s output using the existing firm or non-firm capacity of the Transmission System on an “as available” basis. To the extent Interconnection Customer wants to receive Energy Resource Interconnection Service, Transmission Provider shall construct facilities identified in Attachment A.
	4.1.1.2		Transmission Delivery Service Implications . Under Energy Resource Interconnection Service, Interconnection Customer will be eligible to inject power from the Large Generating Facility into and deliver power across the interconnecting Transmission Provider’s Transmission System on an “as available” basis up to the amount of MWs identified in the applicable stability and steady state studies to the extent the upgrades initially required to qualify for Energy Resource Interconnection Service have been constructed. Where eligible to do so ( e.g., PJM, ISO-NE, NYISO), Interconnection Customer may place a bid to sell into the market up to the maximum identified Large Generating Facility output, subject to any conditions specified in the interconnection service approval, and the Large Generating Facility will be dispatched to the extent Interconnection Customer’s bid clears. In all other instances, no transmission delivery service from the Large Generating Facility is assured, but Interconnection Customer may obtain Point-to-Point Transmission Service, Network Integration Transmission Service, or be used for secondary network transmission service, pursuant to Transmission Provider’s Tariff, up to the maximum output identified in the stability and steady state studies. In those instances, in order for Interconnection Customer to obtain the right to deliver or

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

inject energy beyond the Large Generating Facility Point of Interconnection or to improve its ability to do so, transmission delivery service must be obtained pursuant to the provisions of Transmission Provider’s Tariff. The Interconnection Customer’s ability to inject its Large Generating Facility output beyond the Point of Interconnection, therefore, will depend on the existing capacity of Transmission Provider’s Transmission System at such time as a transmission service request is made that would accommodate such delivery. The provision of firm Point-to-Point Transmission Service or Network Integration Transmission Service may require the construction of additional Network Upgrades.

4.1.2

Network Resource Interconnection Service.

	4.1.2.1		The Product . Transmission Provider must conduct the necessary studies and construct the Network Upgrades needed to integrate the Large Generating Facility (1) in a manner comparable to that in which Transmission Provider integrates its generating facilities to serve native load customers; or (2) in an ISO or RTO with market based congestion management, in the same manner as all Network Resources. To the extent Interconnection Customer wants to receive Network Resource Interconnection Service, Transmission Provider shall construct the facilities identified in Attachment A to this LGIA.
	4.1.2.2		Transmission Delivery Service Implications . Network Resource Interconnection Service allows Interconnection Customer’s Large Generating Facility to be designated by any Network Customer under the Tariff on Transmission Provider’s Transmission System as a Network Resource, up to the Large Generating Facility’s full output, on the same basis as existing Network Resources interconnected to Transmission Provider’s Transmission System, and to be studied as a Network Resource on the assumption that such a designation will occur. Although Network Resource Interconnection Service does not convey a reservation of transmission service, any Network Customer under the Tariff can utilize its network service under the Tariff to obtain delivery of energy from the interconnected Interconnection Customer’s Large Generating Facility in the same manner as it accesses Network Resources. A Large Generating Facility receiving Network Resource Interconnection Service may also be used to provide Ancillary Services after technical studies and/or periodic analyses are performed with respect to the Large Generating Facility’s ability to provide any applicable Ancillary Services, provided that such studies and analyses have been or would be required in connection with the provision of such Ancillary Services by any existing Network Resource. However, if an Interconnection Customer’s Large Generating Facility has not been designated as a Network Resource by any load, it cannot be required to provide Ancillary Services except to the extent such requirements extend to all generating facilities that are similarly situated. The

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

			provision of Network Integration Transmission Service or firm Point-to-Point Transmission Service may require additional studies and the construction of additional upgrades. Because such studies and upgrades would be associated with a request for delivery service under the Tariff, cost responsibility for the studies and upgrades would be in accordance with FERC’s policy for pricing transmission delivery services.
			Network Resource Interconnection Service does not necessarily provide Interconnection Customer with the capability to physically deliver the output of its Large Generating Facility to any particular load on Transmission Provider’s Transmission System without incurring congestion costs. In the event of transmission constraints on Transmission Provider’s Transmission System, Interconnection Customer’s Large Generating Facility shall be subject to the applicable congestion management procedures in Transmission Provider’s Transmission System in the same manner as Network Resources.
			There is no requirement either at the time of study or interconnection, or at any point in the future, that Interconnection Customer’s Large Generating Facility be designated as a Network Resource by a Network Service Customer under the Tariff or that Interconnection Customer identify a specific buyer (or sink). To the extent a Network Customer does designate the Large Generating Facility as a Network Resource, it must do so pursuant to Transmission Provider’s Tariff.
			Once an Interconnection Customer satisfies the requirements for obtaining Network Resource Interconnection Service, any future transmission service request for delivery from the Large Generating Facility within Transmission Provider’s Transmission System of any amount of capacity and/or energy, up to the amount initially studied, will not require that any additional studies be performed or that any further upgrades associated with such Large Generating Facility be undertaken, regardless of whether or not such Large Generating Facility is ever designated by a Network Customer as a Network Resource and regardless of changes in ownership of the Large Generating Facility. However, the reduction or elimination of congestion or redispatch costs may require additional studies and the construction of additional upgrades.
			To the extent Interconnection Customer enters into an arrangement for long term transmission service for deliveries from the Large Generating Facility outside Transmission Provider’s Transmission System, such request may require additional studies and upgrades in order for Transmission Provider to grant such request.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

4.2		Provision of Service . Transmission Provider shall provide Interconnection Service for the Large Generating Facility at the Point of Interconnection.
4.3		Performance Standards . Each Party shall perform all of its obligations under this LGIA in accordance with Applicable Laws and Regulations, Applicable Reliability Standards, and Good Utility Practice, and to the extent a Party is required or prevented or limited in taking any action by such regulations and standards, such Party shall not be deemed to be in Breach of this LGIA for its compliance therewith. If such Party is a Transmission Provider or Transmission Owner, then that Party shall amend the LGIA and submit the amendment to FERC for approval.
4.4		No Transmission Delivery Service . The execution of this LGIA does not constitute a request for, nor the provision of, any transmission delivery service under Transmission Provider’s Tariff, and does not convey any right to deliver electricity to any specific customer or Point of Delivery.
4.5		Interconnection Customer Provided Services . The services provided by Interconnection Customer under this LGIA are set forth in Article 9.6 and Article 13.5.1. Interconnection Customer shall be paid for such services in accordance with Article 11.6.

Article 5. Interconnection Facilities Engineering, Procurement, and Construction

5.1

Options . Unless otherwise mutually agreed to between the Parties, Interconnection Customer shall select the In-Service Date, Initial Synchronization Date, and Commercial Operation Date; and either Standard Option or Alternate Option set forth below for completion of Transmission Provider’s Interconnection Facilities and Network Upgrades as set forth in Appendix A, Interconnection Facilities and Network Upgrades, and such dates and selected option shall be set forth in Appendix B, Milestones.

	5.1.1		Standard Option . Transmission Provider shall design, procure, and construct Transmission Provider’s Interconnection Facilities and Network Upgrades, using Reasonable Efforts to complete Transmission Provider’s Interconnection Facilities and Network Upgrades by the dates set forth in Appendix B, Milestones. Transmission Provider shall not be required to undertake any action which is inconsistent with its standard safety practices, its material and equipment specifications, its design criteria and construction procedures, its labor agreements, and Applicable Laws and Regulations. In the event Transmission Provider reasonably expects that it will not be able to complete Transmission Provider’s Interconnection Facilities and Network Upgrades by the specified dates, Transmission Provider shall promptly provide written notice to Interconnection Customer and shall undertake Reasonable Efforts to meet the earliest dates thereafter.
	5.1.2		Alternate Option . If the dates designated by Interconnection Customer are acceptable to Transmission Provider, Transmission Provider shall so notify Interconnection Customer within thirty (30) Calendar Days, and shall assume responsibility for the design,

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

			procurement and construction of Transmission Provider’s Interconnection Facilities by the designated dates.
			If Transmission Provider subsequently fails to complete Transmission Provider’s Interconnection Facilities by the In-Service Date, to the extent necessary to provide back feed power; or fails to complete Network Upgrades by the Initial Synchronization Date to the extent necessary to allow for Trial Operation at full power output, unless other arrangements are made by the Parties for such Trial Operation; or fails to complete the Network Upgrades by the Commercial Operation Date, as such dates are reflected in Appendix B, Milestones; Transmission Provider shall pay Interconnection Customer liquidated damages in accordance with Article 5.3, Liquidated Damages, provided, however, the dates designated by Interconnection Customer shall be extended day for day for each day that the applicable RTO or ISO refuses to grant clearances to install equipment.
	5.1.3		Option to Build . If the dates designated by Interconnection Customer are not acceptable to Transmission Provider, Transmission Provider shall so notify Interconnection Customer within thirty (30) Calendar Days, and unless the Parties agree otherwise, Interconnection Customer shall have the option to assume responsibility for the design, procurement and construction of Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades on the dates specified in Article 5.1.2. Transmission Provider and Interconnection Customer must agree as to what constitutes Stand Alone Network Upgrades and identify such Stand Alone Network Upgrades in Appendix A. Except for Stand Alone Network Upgrades, Interconnection Customer shall have no right to construct Network Upgrades under this option.
	5.1.4		Negotiated Option . If Interconnection Customer elects not to exercise its option under Article 5.1.3, Option to Build, Interconnection Customer shall so notify Transmission Provider within thirty (30) Calendar Days, and the Parties shall in good faith attempt to negotiate terms and conditions (including revision of the specified dates and liquidated damages, the provision of incentives or the procurement and construction of a portion of Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades by Interconnection Customer) pursuant to which Transmission Provider is responsible for the design, procurement and construction of Transmission Provider’s Interconnection Facilities and Network Upgrades. If the Parties are unable to reach agreement on such terms and conditions, Transmission Provider shall assume responsibility for the design, procurement and construction of Transmission Provider’s Interconnection Facilities and Network Upgrades pursuant to 5.1.1, Standard Option.

5.2

General Conditions Applicable to Option to Build. If Interconnection Customer assumes responsibility for the design, procurement and construction of Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades,

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

			(1) Interconnection Customer shall engineer, procure equipment, and construct Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades (or portions thereof) using Good Utility Practice and using standards and specifications provided in advance by Transmission Provider;
			(2) Interconnection Customer’s engineering, procurement and construction of Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades shall comply with all requirements of law and Applicable Reliability Standards to which Transmission Provider would be subject in the engineering, procurement or construction of Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades;
			(3) Transmission Provider shall review and approve the engineering design, equipment acceptance tests, and the construction of Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades;
			(4) prior to commencement of construction, Interconnection Customer shall provide to Transmission Provider a schedule for construction of Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades, and shall promptly respond to requests for information from Transmission Provider;
			(5) at any time during construction, Transmission Provider shall have the right to gain unrestricted access to Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades and to conduct inspections of the same;
			(6) at any time during construction, should any phase of the engineering, equipment procurement, or construction of Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades not meet the standards and specifications provided by Transmission Provider, Interconnection Customer shall be obligated to remedy deficiencies in that portion of Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades;
			(7) Interconnection Customer shall indemnify Transmission Provider for claims arising from Interconnection Customer’s construction of Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades under the terms and procedures applicable to Article 18.1 Indemnity;
			(8) Interconnection Customer shall transfer control of Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades to Transmission Provider;
			(9) Unless Parties otherwise agree, Interconnection Customer shall transfer ownership of Transmission Provider’s Interconnection Facilities and Stand-Alone Network Upgrades to Transmission Provider;

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

			(10) Transmission Provider shall approve and accept for operation and maintenance Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades to the extent engineered, procured, and constructed in accordance with this Article 5.2; and
			(11) Interconnection Customer shall deliver to Transmission Provider “as-built” drawings, information, and any other documents that are reasonably required by Transmission Provider to assure that the Interconnection Facilities and Stand-Alone Network Upgrades are built to the standards and specifications required by Transmission Provider.

5.3.		Liquidated Damages . The actual damages to Interconnection Customer, in the event Transmission Provider’s Interconnection Facilities or Network Upgrades are not completed by the dates designated by Interconnection Customer and accepted by Transmission Provider pursuant to subparagraphs 5.1.2 or 5.1.4, above, may include Interconnection Customer’s fixed operation and maintenance costs and lost opportunity costs. Such actual damages are uncertain and impossible to determine at this time. Because of such uncertainty, any liquidated damages paid by Transmission Provider to Interconnection Customer in the event that Transmission Provider does not complete any portion of Transmission Provider’s Interconnection Facilities or Network Upgrades by the applicable dates, shall be an amount equal to 1 / 2 of 1 percent per day of the actual cost of Transmission Provider’s Interconnection Facilities and Network Upgrades, in the aggregate, for which Transmission Provider has assumed responsibility to design, procure and construct.
		However, in no event shall the total liquidated damages exceed 20 percent of the actual cost of Transmission Provider’s Interconnection Facilities and Network Upgrades for which Transmission Provider has assumed responsibility to design, procure, and construct. The foregoing payments will be made by Transmission Provider to Interconnection Customer as just compensation for the damages caused to Interconnection Customer, which actual damages are uncertain and impossible to determine at this time, and as reasonable liquidated damages, but not as a penalty or a method to secure performance of this LGIA. Liquidated damages, when the Parties agree to them, are the exclusive remedy for the Transmission Provider’s failure to meet its schedule.
		No liquidated damages shall be paid to Interconnection Customer if: (1) Interconnection Customer is not ready to commence use of Transmission Provider’s Interconnection Facilities or Network Upgrades to take the delivery of power for the Large Generating Facility’s Trial Operation or to export power from the Large Generating Facility on the specified dates, unless Interconnection Customer would have been able to commence use of Transmission Provider’s Interconnection Facilities or Network Upgrades to take the delivery of power for Large Generating Facility’s Trial Operation or to export power from the Large Generating Facility, but for Transmission Provider’s delay; (2) Transmission Provider’s failure to meet the specified dates is the result of the action or inaction of Interconnection Customer or any other Interconnection

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

		Customer who has entered into an LGIA with Transmission Provider or any cause beyond Transmission Provider’s reasonable control or reasonable ability to cure; (3) the Interconnection Customer has assumed responsibility for the design, procurement and construction of Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades; or (4) the Parties have otherwise agreed.
5.4		Power System Stabilizers . The Interconnection Customer shall procure, install, maintain and operate Power System Stabilizers in accordance with the guidelines and procedures established by the Applicable Reliability Council. Transmission Provider reserves the right to reasonably establish minimum acceptable settings for any installed Power System Stabilizers, subject to the design and operating limitations of the Large Generating Facility. If the Large Generating Facility’s Power System Stabilizers are removed from service or not capable of automatic operation, Interconnection Customer shall immediately notify Transmission Provider’s system operator, or its designated representative. The requirements of this paragraph shall not apply to wind generators.
5.5		Equipment Procurement . If responsibility for construction of Transmission Provider’s Interconnection Facilities or Network Upgrades is to be borne by Transmission Provider, then Transmission Provider shall commence design of Transmission Provider’s Interconnection Facilities or Network Upgrades and procure necessary equipment as soon as practicable after all of the following conditions are satisfied, unless the Parties otherwise agree in writing:

	5.5.1		Transmission Provider has completed the Facilities Study pursuant to the Facilities Study Agreement;
	5.5.2		Transmission Provider has received written authorization to proceed with design and procurement from Interconnection Customer by the date specified in Appendix B, Milestones; and
	5.5.3		Interconnection Customer has provided security to Transmission Provider in accordance with Article 11.5 by the dates specified in Appendix B, Milestones.

5.6

Construction Commencement . Transmission Provider shall commence construction of Transmission Provider’s Interconnection Facilities and Network Upgrades for which it is responsible as soon as practicable after the following additional conditions are satisfied:

	5.6.1		Approval of the appropriate Governmental Authority has been obtained for any facilities requiring regulatory approval;
	5.6.2		Necessary real property rights and rights-of-way have been obtained, to the extent required for the construction of a discrete aspect of Transmission Provider’s Interconnection Facilities and Network Upgrades;

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

	5.6.3		Transmission Provider has received written authorization to proceed with construction from Interconnection Customer by the date specified in Appendix B, Milestones; and
	5.6.4		Interconnection Customer has provided security to Transmission Provider in accordance with Article 11.5 by the dates specified in Appendix B, Milestones.

5.7		Work Progress . The Parties will keep each other advised periodically as to the progress of their respective design, procurement and construction efforts. Either Party may, at any time, request a progress report from the other Party. If, at any time, Interconnection Customer determines that the completion of Transmission Provider’s Interconnection Facilities will not be required until after the specified In-Service Date, Interconnection Customer will provide written notice to Transmission Provider of such later date upon which the completion of Transmission Provider’s Interconnection Facilities will be required.
5.8		Information Exchange . As soon as reasonably practicable after the Effective Date, the Parties shall exchange information regarding the design and compatibility of the Parties’ Interconnection Facilities and compatibility of the Interconnection Facilities with Transmission Provider’s Transmission System, and shall work diligently and in good faith to make any necessary design changes.
5.9		Limited Operation . If any of Transmission Provider’s Interconnection Facilities or Network Upgrades are not reasonably expected to be completed prior to the Commercial Operation Date of the Large Generating Facility, Transmission Provider shall, upon the request and at the expense of Interconnection Customer, perform operating studies on a timely basis to determine the extent to which the Large Generating Facility and Interconnection Customer’s Interconnection Facilities may operate prior to the completion of Transmission Provider’s Interconnection Facilities or Network Upgrades consistent with Applicable Laws and Regulations, Applicable Reliability Standards, Good Utility Practice, and this LGIA. Transmission Provider shall permit Interconnection Customer to operate the Large Generating Facility and Interconnection Customer’s Interconnection Facilities in accordance with the results of such studies.
5.10		Interconnection Customer’s Interconnection Facilities (‘ICIF’) . Interconnection Customer shall, at its expense, design, procure, construct, own and install the ICIF, as set forth in Appendix A, Interconnection Facilities, Network Upgrades and Distribution Upgrades.

5.10.1

Interconnection Customer’s Interconnection Facility Specifications . Interconnection Customer shall submit initial specifications for the ICIF, including System Protection Facilities, to Transmission Provider at least one hundred eighty (180) Calendar Days prior to the Initial Synchronization Date; and final specifications for review and comment at least ninety (90) Calendar Days prior to the Initial Synchronization Date. Transmission Provider shall review such specifications to ensure that the ICIF are compatible with the technical specifications, operational control, and safety requirements of Transmission Provider and comment on such specifications within thirty (30) Calendar

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

			Days of Interconnection Customer’s submission. All specifications provided hereunder shall be deemed confidential.
	5.10.2		Transmission Provider’s Review . Transmission Provider’s review of Interconnection Customer’s final specifications shall not be construed as confirming, endorsing, or providing a warranty as to the design, fitness, safety, durability or reliability of the Large Generating Facility, or the ICIF. Interconnection Customer shall make such changes to the ICIF as may reasonably be required by Transmission Provider, in accordance with Good Utility Practice, to ensure that the ICIF are compatible with the technical specifications, operational control, and safety requirements of Transmission Provider.
	5.10.3		ICIF Construction . The ICIF shall be designed and constructed in accordance with Good Utility Practice. Within one hundred twenty (120) Calendar Days after the Commercial Operation Date, unless the Parties agree on another mutually acceptable deadline, Interconnection Customer shall deliver to Transmission Provider “as-built” drawings, information and documents for the ICIF, such as: a one-line diagram, a site plan showing the Large Generating Facility and the ICIF, plan and elevation drawings showing the layout of the ICIF, a relay functional diagram, relaying AC and DC schematic wiring diagrams and relay settings for all facilities associated with Interconnection Customer’s step-up transformers, the facilities connecting the Large Generating Facility to the step-up transformers and the ICIF, and the impedances (determined by factory tests) for the associated step-up transformers and the Large Generating Facility. The Interconnection Customer shall provide Transmission Provider specifications for the excitation system, automatic voltage regulator, Large Generating Facility control and protection settings, transformer tap settings, and communications, if applicable.

5.11		Transmission Provider’s Interconnection Facilities Construction . Transmission Provider’s Interconnection Facilities shall be designed and constructed in accordance with Good Utility Practice. Upon request, within one hundred twenty (120) Calendar Days after the Commercial Operation Date, unless the Parties agree on another mutually acceptable deadline, Transmission Provider shall deliver to Interconnection Customer the following “as-built” drawings, information and documents for Transmission Provider’s Interconnection Facilities [include appropriate drawings and relay diagrams].
		Transmission Provider will obtain control of Transmission Provider’s Interconnection Facilities and Stand Alone Network Upgrades upon completion of such facilities.
5.12		Access Rights . Upon reasonable notice and supervision by a Party, and subject to any required or necessary regulatory approvals, a Party (“Granting Party”) shall furnish at no cost to the other Party (“Access Party”) any rights of use, licenses, rights of way and easements with respect to lands owned or controlled by the Granting Party, its agents (if allowed under the applicable agency agreement), or any Affiliate, that are necessary to enable the Access Party to obtain

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

		ingress and egress to construct, operate, maintain, repair, test (or witness testing), inspect, replace or remove facilities and equipment to: (i) interconnect the Large Generating Facility with the Transmission System; (ii) operate and maintain the Large Generating Facility, the Interconnection Facilities and the Transmission System; and (iii) disconnect or remove the Access Party’s facilities and equipment upon termination of this LGIA. In exercising such licenses, rights of way and easements, the Access Party shall not unreasonably disrupt or interfere with normal operation of the Granting Party’s business and shall adhere to the safety rules and procedures established in advance, as may be changed from time to time, by the Granting Party and provided to the Access Party.
5.13		Lands of Other Property Owners . If any part of Transmission Provider or Transmission Owner’s Interconnection Facilities and/or Network Upgrades is to be installed on property owned by persons other than Interconnection Customer or Transmission Provider or Transmission Owner, Transmission Provider or Transmission Owner shall at Interconnection Customer’s expense use efforts, similar in nature and extent to those that it typically undertakes on its own behalf or on behalf of its Affiliates, including use of its eminent domain authority, and to the extent consistent with state law, to procure from such persons any rights of use, licenses, rights of way and easements that are necessary to construct, operate, maintain, test, inspect, replace or remove Transmission Provider or Transmission Owner’s Interconnection Facilities and/or Network Upgrades upon such property.
5.14		Permits. Transmission Provider or Transmission Owner and Interconnection Customer shall cooperate with each other in good faith in obtaining all permits, licenses, and authorizations that are necessary to accomplish the interconnection in compliance with Applicable Laws and Regulations. With respect to this paragraph, Transmission Provider or Transmission Owner shall provide permitting assistance to Interconnection Customer comparable to that provided to Transmission Provider’s own, or an Affiliate’s generation.
5.15		Early Construction of Base Case Facilities. Interconnection Customer may request Transmission Provider to construct, and Transmission Provider shall construct, using Reasonable Efforts to accommodate Interconnection Customer’s In-Service Date, all or any portion of any Network Upgrades required for Interconnection Customer to be interconnected to the Transmission System which are included in the Base Case of the Facilities Study for Interconnection Customer, and which also are required to be constructed for another Interconnection Customer, but where such construction is not scheduled to be completed in time to achieve Interconnection Customer’s In-Service Date.
5.16		Suspension. Interconnection Customer reserves the right, upon written notice to Transmission Provider, to suspend at any time all work by Transmission Provider associated with the construction and installation of Transmission Provider’s Interconnection Facilities and/or Network Upgrades required under this LGIA with the condition that Transmission System shall be left in a safe and reliable condition in accordance with Good Utility Practice and Transmission Provider’s safety and reliability criteria. In such event, Interconnection Customer shall be

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

		responsible for all reasonable and necessary costs which Transmission Provider (i) has incurred pursuant to this LGIA prior to the suspension and (ii) incurs in suspending such work, including any costs incurred to perform such work as may be necessary to ensure the safety of persons and property and the integrity of the Transmission System during such suspension and, if applicable, any costs incurred in connection with the cancellation or suspension of material, equipment and labor contracts which Transmission Provider cannot reasonably avoid; provided, however, that prior to canceling or suspending any such material, equipment or labor contract, Transmission Provider shall obtain Interconnection Customer’s authorization to do so.
		Transmission Provider shall invoice Interconnection Customer for such costs pursuant to Article 12 and shall use due diligence to minimize its costs. In the event Interconnection Customer suspends work by Transmission Provider required under this LGIA pursuant to this Article 5.16, and has not requested Transmission Provider to recommence the work required under this LGIA on or before the expiration of three (3) years following commencement of such suspension, this LGIA shall be deemed terminated. The three-year period shall begin on the date the suspension is requested, or the date of the written notice to Transmission Provider, if no effective date is specified.
5.17		Taxes.

	5.17.1		Interconnection Customer Payments Not Taxable. The Parties intend that all payments or property transfers made by Interconnection Customer to Transmission Provider for the installation of Transmission Provider’s Interconnection Facilities and the Network Upgrades shall be non-taxable, either as contributions to capital, or as an advance, in accordance with the Internal Revenue Code and any applicable state income tax laws and shall not be taxable as contributions in aid of construction or otherwise under the Internal Revenue Code and any applicable state income tax laws.
	5.17.2		Representations and Covenants. In accordance with IRS Notice 2001-82 and IRS Notice 88-129, Interconnection Customer represents and covenants that (i) ownership of the electricity generated at the Large Generating Facility will pass to another party prior to the transmission of the electricity on the Transmission System, (ii) for income tax purposes, the amount of any payments and the cost of any property transferred to Transmission Provider for Transmission Provider’s Interconnection Facilities will be capitalized by Interconnection Customer as an intangible asset and recovered using the straight-line method over a useful life of twenty (20) years, and (iii) any portion of Transmission Provider’s Interconnection Facilities that is a “dual-use intertie,” within the meaning of IRS Notice 88-129, is reasonably expected to carry only a de minimis amount of electricity in the direction of the Large Generating Facility. For this purpose, “de minimis amount” means no more than 5 percent of the total power flows in both directions, calculated in accordance with the “5 percent test” set forth in IRS Notice 88-129. This is not intended to be an exclusive list of the relevant conditions that must be met to conform to IRS requirements for non-taxable treatment.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

			At Transmission Provider’s request, Interconnection Customer shall provide Transmission Provider with a report from an independent engineer confirming its representation in clause (iii), above. Transmission Provider represents and covenants that the cost of Transmission Provider’s Interconnection Facilities paid for by Interconnection Customer will have no net effect on the base upon which rates are determined.
	5.17.3		Indemnification for the Cost Consequences of Current Tax Liability Imposed Upon the Transmission Provider. Notwithstanding Article 5.17.1, Interconnection Customer shall protect, indemnify and hold harmless Transmission Provider from the cost consequences of any current tax liability imposed against Transmission Provider as the result of payments or property transfers made by Interconnection Customer to Transmission Provider under this LGIA for Interconnection Facilities, as well as any interest and penalties, other than interest and penalties attributable to any delay caused by Transmission Provider.
			Transmission Provider shall not include a gross-up for the cost consequences of any current tax liability in the amounts it charges Interconnection Customer under this LGIA unless (i) Transmission Provider has determined, in good faith, that the payments or property transfers made by Interconnection Customer to Transmission Provider should be reported as income subject to taxation or (ii) any Governmental Authority directs Transmission Provider to report payments or property as income subject to taxation; provided, however , that Transmission Provider may require Interconnection Customer to provide security for Interconnection Facilities, in a form reasonably acceptable to Transmission Provider (such as a parental guarantee or a letter of credit), in an amount equal to the cost consequences of any current tax liability under this Article 5.17. Interconnection Customer shall reimburse Transmission Provider for such costs on a fully grossed-up basis, in accordance with Article 5.17.4, within thirty (30) Calendar Days of receiving written notification from Transmission Provider of the amount due, including detail about how the amount was calculated.
			The indemnification obligation shall terminate at the earlier of (1) the expiration of the ten year testing period and the applicable statute of limitation, as it may be extended by Transmission Provider upon request of the IRS, to keep these years open for audit or adjustment, or (2) the occurrence of a subsequent taxable event and the payment of any related indemnification obligations as contemplated by this Article 5.17.
	5.17.4		Tax Gross-Up Amount. Interconnection Customer’s liability for the cost consequences of any current tax liability under this Article 5.17 shall be calculated on a fully grossed-up basis. Except as may otherwise be agreed to by the parties, this means that Interconnection Customer will pay Transmission Provider, in addition to the amount paid for the Interconnection Facilities and Network Upgrades, an amount equal to (1) the current taxes imposed on Transmission Provider (“Current Taxes”) on the excess of (a)

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

			the gross income realized by Transmission Provider as a result of payments or property transfers made by Interconnection Customer to Transmission Provider under this LGIA (without regard to any payments under this Article 5.17) (the “Gross Income Amount”) over (b) the present value of future tax deductions for depreciation that will be available as a result of such payments or property transfers (the “Present Value Depreciation Amount”), plus (2) an additional amount sufficient to permit Transmission Provider to receive and retain, after the payment of all Current Taxes, an amount equal to the net amount described in clause (1).
			For this purpose, (i) Current Taxes shall be computed based on Transmission Provider’s composite federal and state tax rates at the time the payments or property transfers are received and Transmission Provider will be treated as being subject to tax at the highest marginal rates in effect at that time (the “Current Tax Rate”), and (ii) the Present Value Depreciation Amount shall be computed by discounting Transmission Provider’s anticipated tax depreciation deductions as a result of such payments or property transfers by Transmission Provider’s current weighted average cost of capital. Thus, the formula for calculating Interconnection Customer’s liability to Transmission Owner pursuant to this Article 5.17.4 can be expressed as follows: (Current Tax Rate x (Gross Income Amount - Present Value of Tax Depreciation))/(1-Current Tax Rate). Interconnection Customer’s estimated tax liability in the event taxes are imposed shall be stated in Appendix A, Interconnection Facilities, Network Upgrades and Distribution Upgrades.
	5.17.5		Private Letter Ruling or Change or Clarification of Law . At Interconnection Customer’s request and expense, Transmission Provider shall file with the IRS a request for a private letter ruling as to whether any property transferred or sums paid, or to be paid, by Interconnection Customer to Transmission Provider under this LGIA are subject to federal income taxation. Interconnection Customer will prepare the initial draft of the request for a private letter ruling, and will certify under penalties of perjury that all facts represented in such request are true and accurate to the best of Interconnection Customer’s knowledge. Transmission Provider and Interconnection Customer shall cooperate in good faith with respect to the submission of such request.
			Transmission Provider shall keep Interconnection Customer fully informed of the status of such request for a private letter ruling and shall execute either a privacy act waiver or a limited power of attorney, in a form acceptable to the IRS, that authorizes Interconnection Customer to participate in all discussions with the IRS regarding such request for a private letter ruling. Transmission Provider shall allow Interconnection Customer to attend all meetings with IRS officials about the request and shall permit Interconnection Customer to prepare the initial drafts of any follow-up letters in connection with the request.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

	5.17.6		Subsequent Taxable Events . If, within 10 years from the date on which the relevant Transmission Provider’s Interconnection Facilities are placed in service, (i) Interconnection Customer Breaches the covenants contained in Article 5.17.2, (ii) a “disqualification event” occurs within the meaning of IRS Notice 88-129, or (iii) this LGIA terminates and Transmission Provider retains ownership of the Interconnection Facilities and Network Upgrades, Interconnection Customer shall pay a tax gross-up for the cost consequences of any current tax liability imposed on Transmission Provider, calculated using the methodology described in Article 5.17.4 and in accordance with IRS Notice 90-60.
	5.17.7		Contests . In the event any Governmental Authority determines that Transmission Provider’s receipt of payments or property constitutes income that is subject to taxation, Transmission Provider shall notify Interconnection Customer, in writing, within thirty (30) Calendar Days of receiving notification of such determination by a Governmental Authority. Upon the timely written request by Interconnection Customer and at Interconnection Customer’s sole expense, Transmission Provider may appeal, protest, seek abatement of, or otherwise oppose such determination. Upon Interconnection Customer’s written request and sole expense, Transmission Provider may file a claim for refund with respect to any taxes paid under this Article 5.17, whether or not it has received such a determination. Transmission Provider reserves the right to make all decisions with regard to the prosecution of such appeal, protest, abatement or other contest, including the selection of counsel and compromise or settlement of the claim, but Transmission Provider shall keep Interconnection Customer informed, shall consider in good faith suggestions from Interconnection Customer about the conduct of the contest, and shall reasonably permit Interconnection Customer or an Interconnection Customer representative to attend contest proceedings.
			Interconnection Customer shall pay to Transmission Provider on a periodic basis, as invoiced by Transmission Provider, Transmission Provider’s documented reasonable costs of prosecuting such appeal, protest, abatement or other contest. At any time during the contest, Transmission Provider may agree to a settlement either with Interconnection Customer’s consent or after obtaining written advice from nationally-recognized tax counsel, selected by Transmission Provider, but reasonably acceptable to Interconnection Customer, that the proposed settlement represents a reasonable settlement given the hazards of litigation. Interconnection Customer’s obligation shall be based on the amount of the settlement agreed to by Interconnection Customer, or if a higher amount, so much of the settlement that is supported by the written advice from nationally-recognized tax counsel selected under the terms of the preceding sentence. The settlement amount shall be calculated on a fully grossed-up basis to cover any related cost consequences of the current tax liability. Any settlement without Interconnection Customer’s consent or such written advice will relieve Interconnection Customer from any obligation to indemnify Transmission Provider for the tax at issue in the contest.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

5.17.8

Refund. In the event that (a) a private letter ruling is issued to Transmission Provider which holds that any amount paid or the value of any property transferred by Interconnection Customer to Transmission Provider under the terms of this LGIA is not subject to federal income taxation, (b) any legislative change or administrative announcement, notice, ruling or other determination makes it reasonably clear to Transmission Provider in good faith that any amount paid or the value of any property transferred by Interconnection Customer to Transmission Provider under the terms of this LGIA is not taxable to Transmission Provider, (c) any abatement, appeal, protest, or other contest results in a determination that any payments or transfers made by Interconnection Customer to Transmission Provider are not subject to federal income tax, or (d) if Transmission Provider receives a refund from any taxing authority for any overpayment of tax attributable to any payment or property transfer made by Interconnection Customer to Transmission Provider pursuant to this LGIA, Transmission Provider shall promptly refund to Interconnection Customer the following:

(i) any payment made by Interconnection Customer under this Article 5.17 for taxes that is attributable to the amount determined to be non-taxable, together with interest thereon,

(ii) interest on any amount paid by Interconnection Customer to Transmission Provider for such taxes which Transmission Provider did not submit to the taxing authority, calculated in accordance with the methodology set forth in FERC’s regulations at 18 CFR §35.19a(a)(2)(iii) from the date payment was made by Interconnection Customer to the date Transmission Provider refunds such payment to Interconnection Customer, and

(iii) with respect to any such taxes paid by Transmission Provider, any refund or credit Transmission Provider receives or to which it may be entitled from any Governmental Authority, interest (or that portion thereof attributable to the payment described in clause (i), above) owed to Transmission Provider for such overpayment of taxes (including any reduction in interest otherwise payable by Transmission Provider to any Governmental Authority resulting from an offset or credit); as provided, however, that Transmission Provider will remit such amount promptly to Interconnection Customer only after and to the extent that Transmission Provider has received a tax refund, credit or offset from any Governmental Authority for any applicable overpayment of income tax related to Transmission Provider’s Interconnection Facilities.

The intent of this provision is to leave the Parties, to the extent practicable, in the event that no taxes are due with respect to any payment for Interconnection Facilities and Network Upgrades hereunder, in the same position they would have been in had no such tax payments been made.

Arizona Public Service Company		APS Contract No. 52023
LGIA (Large Generator Interconnection Agreement)

	5.17.9		Taxes Other Than Income Taxes . Upon the timely request by Interconnection Customer, and at Interconnection Customer’s sole expense, Transmission Provider may appeal, protest, seek abatement of, or otherwise contest any tax (other than federal or state income tax) asserted or assessed against Transmission Provider for which Interconnection Customer may be required to reimburse Transmission Provider under the terms of this LGIA. Interconnection Customer shall pay to Transmission Provider on a periodic basis, as invoiced by Transmission Provider, Transmission Provider’s documented reasonable costs of prosecuting such appeal, protest, abatement, or other contest. Interconnection Customer and Transmission Provider shall cooperate in good faith with respect to any such contest. Unless the payment of such taxes is a prerequisite to an appeal or abatement or cannot be deferred, no amount shall be payable by Interconnection Customer to Transmission Provider for such taxes until they are assessed by a final, non-appealable order by any court or agency of competent jurisdiction. In the event that a tax payment is withheld and ultimately due and payable after appeal, Interconnection Customer will be responsible for all taxes, interest and penalties, other than penalties attributable to any delay caused by Transmission Provider.
	5.17.10		Transmission Owners Who Are Not Transmission Providers. If Transmission Provider is not the same entity as the Transmission Owner, then (i) all references in this Article 5.17 to Transmission Provider shall be deemed also to refer to and to include the Transmission Owner, as appropriate, and (ii) this LGIA shall not become effective until such Transmission Owner shall have agreed in writing to assume all of the duties and obligations of Transmission Provider under this Article 5.17 of this LGIA.

5.18		Tax Status . Each Party shall cooperate with the other to maintain the other Party’s tax status. Nothing in this LGIA is intended to adversely affect any Transmission Provider’s tax exempt status with respect to the issuance of bonds including, but not limited to, Local Furnishing Bonds.
5.19		Modification.

5.19.1

General. Either Party may undertake modifications to its facilities. If a Party plans to undertake a modification that reasonably may be expected to affect the other Party’s facilities, that Party shall provide to the other Party sufficient information regarding such modification so that the other Party may evaluate the potential impact of such modification prior to commencement of the work. Such information shall be deemed to be confidential hereunder and shall include information concerning the timing of such modifications and whether such modifications are expected to interrupt the flow of electricity from the Large Generating Facility. The Party desiring to perform such work shall provide the relevant drawings, plans, and specifications to the other Party at least ninety (90) Calendar Days in advance of the commencement of the work or such shorter period upon which the Parties may agree, which agreement shall not unreasonably be withheld, conditioned or delayed.