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August 16, 1998
Rep. Joe R. Salter
P.O. Box 250
Florien, LA. 71429
Subject: Review of the Power Sales Agreement By the Attorney General's Office.
Dear Representative Salter:
Enclosed are the following documents:
Power Sales Agreement SRAL/SRAT and Electric Companies entered into on February 1, 1964.
Reference Guide Toledo Bend Project Consolidated Power Sales Agreement between SRAL/SRAT and the Power Companies.
Executive Summary of Changes Reflected in Second Amendment to the Power Sales Agreement and Incident to the Agreement.
Agreement Incident to The Second Amendment to Power Sales Agreement .
Operating Guide Rule Curve.
Federal Power Commission (now Federal Energy Regulatory Commission) License for the Toledo Bend Project, Project No. 2305, dated. October 14, 1963.
General: It is requested the Power Sales Agreement entered into between the Sabine River Authorities of Louisiana and Texas and Central Louisiana Electric Company, Gulf States Utilities (GSU)and Louisiana Power and Light Company (LP&L), (GSU and LP&L were purchased by and are now a part of Entergy), be reviewed in its entirety to determine if the Authorities have the right to unilaterally establish 168' msl as the minimum water level at which routine power production will be halted. And if such a water level is established what liability, if any, would the Authorities likely incur?
The following questions are believed pertinent to the review of the Power Sales Agreement. This list of questions is not intended to be all encompassing of the subject.
1. Are the Authorities and Companies required to comply with the statues which created the Sabine River Authority of Louisiana and any state laws enacted prior or subsequent to the signing of the Power Sales Agreement?
2. Is there a requirement to provide for recreation in any of the laws which created the Sabine River Authority of Louisiana?
3. Which of the parties to the Power Sales Agreement determines when and how much water is available for power generation?
4. Section 1.16 Power gives an estimate of prime energy as does Section 1.17. Does that mean that there is no guarantee of a maximum peak power of 65,700,000 KWH by the Authorities?
5. Section 2.13: Does this paragraph require the Authorities to have insurance to compensate the Companies for power that they would not receive if the Authorities established 168' msl as the minimum level at which water is available for routine power generation even during the Peaking Period?
6. Section 3.02 Sale of Power: Does this contract expire in the year 2018 unless proper notice is given by the Authorities of their intent not to renew the contract?
7. Section 4.06 Generating Station Operation: Does this section clarify who establishes the availability of water for power generation, the Authorities or the Companies?
8. Section 5.01 Obligation of Authorities: Does this section define the responsibility of the Authorities to operate the Reservoir? Does that responsibility include establishing a minimum water level for power generation if they so choose?
9. Section 5.02 Indemnification of Companies: Does this section require the Authorities to indemnify the Companies if they establish 168' msl as the minimum water level for power generation, if establishing a minimum level results in less than 65,700,000 KWH of power being generated during the Peaking Period?
10. Section 5.03 Contractual Obligations: In this section it appears that the Authorities responsibilities are prioritized. Recreation would probably qualify as a requirement in either or both 1. and 2. Therefore, would it be a requirement to provide for recreation before providing water for power generation?
11. Section 5.04 Operation of Reservoir: Does this section require providing for recreation before power generation?
12. Section 5.05 Scheduling of Production: Does this section give the Authorities the right to determine the most efficient water level for power generation? What does the term "Insofar as practicable" mean when used in the context of this section? Does this section require the reservoir be lowered to 162.2' msl to provide Peaking Power of 65,700,000 KWH ?
13. Section 5.05 Scheduling of Production: Third Paragraph. "Subject to the availability of water. If the Authorities are designated as the party who determines water availability, does this section again establish or confirm the Authorities right to set a minimum water level for power production other than the bottom of the power pool? Or is water above 162.2' msl considered available for power production and can not be changed by the Authorities?
14. Section 5.05 Scheduling of Production: Fifth Paragraph. Does this paragraph further establish or reinforce the theory that the Authorities are responsible for operating the reservoir and can establish the criteria to determine the availability of water for power production?
15. The operating Guide Rule Curve is the document which is followed to determine routine power generation. Does this document have the force of a contract? Can the Authorities unilaterally change this document if it is an in-house guide to operating the power house? (Please note, this is the only document which specifies the amount of water to be used in each month of the Peaking Period. In the Power Sales Agreement only the Peaking Period and the total amount of power is stated. Because of this document, power above the specified amount is not presently counted as Prime Power. In years such as 1995, the specified 65,700,000 KWH was satisfied in early July but, because of this document power production continued until the lake was reduced to 165' msl. Of course, that is not the case this year.)
16. The FERC license to operate the Toledo Bend project on page 8. Article 37. states "The Reservoir Operation Schedule shall be adjusted to accommodate the recreation use of the reservoir area as far as such adjustment is compatible with the primary purpose of the project and requirements of downstream releases." Recreation was listed in the purpose for the reservoir in the 1958 Forrest & Cotton Study. Does it therefore mean that the reservoir operation must be adjusted to allow for adequate access for recreational use of the reservoir? Should the Authorities fail to do so, would they possibly be in violation of the operating license?
17. Section 8.01 State and Federal Laws. If a law is passed in either or both states or by the US Legislature to require routine power generation be stopped at 168' msl except for certain reasons, e.g. to meet minimum down river flows, dam inspection and repair and to prevent an imminent brownout, would the Authorities and Companies be required to comply? Would any compensation be due the Companies because of this requirement?
Thank you again for your assistance and support in this effort.
Sincerely,
Larry E. Kelly
210 Hillcrest Drive
Anacoco, La. 71403
(318) 286-9946
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