ATTACHMENT RELATING TO TERMS OF SALE
A. The disposition shall consist of the downstream power benefits to
which Canada is entitled under the Treaty, other than Canada's
entitlement to downstream power benefits resulting from the con-
struction or operation of a project described in Article IX of the
Treaty, and shall be by way of a contract of sale authorized in
accordance with Article VIII of the Treaty between the British
Columbia Hydro and Power Authority and a single Purchaser
containing provisions mutually satisfactory to the parties to the
contract but shall be subject to and be operative in accordance with
the following general conditions and limits:
1. (a) The storages described in Article II of the Treaty shall be
fully operative for power purposes in accordance with the
following schedule:
Storage described in Article II (2) (c) - approximately
1,400, 000 acre-feet on 1 April 1968,
Storage described in Article II (2) (b) - approximately
7,100,000 acre-feet on 1 April 1969,
Storage described in Article II (2) (a) - approximately
7,000,000 acre-feet on 1 April 1973.
(b) The period of sale of thc entitlement allocated to each of the
storages shall terminate and expire thirty years from the
date on which that storage is required to be fully operative
for power purposes in accordance with the schedule in
subparagraph (a) of this paragraph.
(c) In the event any storage is not fully operative in accordance
with the schedule in subparagraph (a) of this paragraph or if,
during the period of sale, the storage is not operated as
required by the hydro-electric operating plans agreed upon in
accordance with the Treaty, as modified by any detailed
operating plan agreed upon in accordance with Article
XIV (2) (k) of the Treaty, and the Canadian entitlement is
thereby reduced, the British Columbia Hydro and Power
Authority shall pay the Purchaser an amount equal to the
cost it would have to incur to replace that part of the
reduction in the Canadian entitlement which the vendees of
the Purchaser could have used other than costs that could
have been avoided had every reasonable effort to mitigate
losses been made by the Purchaser, the United States entity
and the owners of non-federal dams on the Columbia River
in the United States of America. Alternatively, the British
Columbia Hydro and Power Authority may, at its option,
supply power to the Purchaser in an amount which assures
that the Purchaser receives the capacity and energy which
would have constituted that part of the reduction in the
Canadian entitlement that the vendees of the Purchaser could
have used if there had been no default, together with
appropriate adjustments to reflect transmission costs in the
United States of America, delivery to be made when the loss
of power would otherwise have occurred.
If the assurance described in paragraph B. 5. of this
Attachment is given to the Purchaser, the United States
entity may succeed to all the rights of the Purchaser and
its vendees to receive the entire Canadian entitlement, or
that part that could be used by the vendees, and to be
compensated by British Columbia Hydro and Power Authority
in the event of non-receipt thereof. The United States
entity agrees that before it purchases more costly power
from any third party for the purpose of supplying the
necessary amount of the Canadian entitlement to the
Purchaser, it will first cause to be delivered to the
Purchaser, or for its account, any available surplus
capacity or energy from the United States Federal Columbia
River System and compensation to the United States entity
be cause of such deliveries shall be computed by applying
the then applicable rate schedules of the Bonneville Power
Administration to the deliveries.
In the event of disagreement, determination of compensation
in money or power due under this paragraph shalt be
resolved by arbitration and shall be confined to the actual
loss incurred in accordance with the principles in this
paragraph.
(d) For the purpose of allocating downstream power benefits
among the Treaty storages from 1 April 1998 to 1 April 2003 ,
the percentage of downstream power benefits allocated to
each Treaty storage shall be the percentage of the total of
the Treaty storages provided by that storage.
2. For the period of the sale the British Columbia Hydro and Power
Authority shall operate and maintain the Treaty storages in
accordance with the provisions of the Treaty.
3. (a) The purchase price of the entitlement shall be $254,400,000
in United States funds as of 1 October 1964, subject to
adjustment, in the event of an earlier payment of all or part
thereof, to the then present worth, at a discount rate of
4 1/2 per cent per annum.
(b) The purchase price shall be paid to Canada contemporane-
ously with the exchange of ratifications of the Treaty and
shall be applied towards the cost of constructing the Treaty
projects through a transfer of the purchase price by Canada
to the Government of British Columbia, pursuant to
arrangements deemed satisfactory to Canada, to be entered
into between Canada and the Government of British Columbia.
4. If, during the period of the sale, there is any reduction in
Canada's entitlement to downstream power benefits which results
from action taken by the Canadian entity pursuant to paragraph
7 of Annex A of the Treaty, the British Columbia Hydro and
Power Authority shall, by supplying power to the Purchaser, or
otherwise as may be agreed, offset that reduction in a manner
so that the Purchaser will be compensated therefor.
5. The Purchaser shall have and may exercise the rights of the
British Columbia Hydro and Power Authority relating to the
negotiation and conclusion with the United States entity, of
proposals relating to Hydra exchanges authorized by Article VI I I (2)
of the Treaty with respect to any portion of Canada's entitlement
to downstream power benefits sold to the Purchaser.
B. The Notes to be exchanged pursuant to Article VIII (1) of the Treaty
shall contain, inter alia, provisions incorporating the following
requirements:
1. As soon as practicable after start of construction of each Treaty
project the Canadian and United States entities shall agree upon
a program for filling the storage provided by the project. The
filling program shall have the objective of having the storage
described in Article II (2) (c) and Article II (2) (b) of the Treaty
full by 1 September following the date when the storages become
fully operative and the storage provided by the dam mentioned
in Article II (2) (a) of the Treaty full to 15 million acre-feet by
1 September 1975. This objective shall be reflected in the
hydro-electric operating plans and shall take into account
generating requirements at-site and downstream in Canada and
the United States of America to meet loads.
2. In the event the United States of America becomes entitled to
compensation in respect of a breach of the obligation under
Article IV (6) of the Treaty to commence full operation of a
storage, compensation payable to the United States of America
under Article XVIII (5) (a) of the Treaty shall be made in an
amount equal to 2.70 mills per kilowatt-hour, and 46 cents per
kilowatt of dependable capacity for each month or fraction thereof,
in United States funds, for and in lieu of the power which would
have been forfeited under Article XVIII (5) (a) of the Treaty if
Canada's entitlement to downstream power benefits had not been
sold in the United States of America. Alternatively, Canada may,
at its option, supply capacity and energy to the United States
entity in an amount equal to that which would have been forfeited,
together with appropriate adjustments to reflect transmission
costs in the United States of America, delivery to be made when
the loss would otherwise have occurred.
3. A diminution of Canada' s entitlement to downstream power
benefits sold in the United States of America which is directly
attributable to a failure to comply with paragraph A. 1 (a) or
paragraph A. 2 of this Attachment, in the absence of compensation
therefor by the British Columbia Hydro and Power Authority,
constitutes a breach of the Treaty by Canada and Article
XVIII (5) of the Treaty and the exculpatory provisions in
Article XVIII of the Treaty do not apply to such breach.
Compensation or replacement of power as specified in par-
agraph A. 1 (c) of this Attachment shall be made by Canada and
shall be accepted by B United States of America as complete
satisfaction of Canada' s liability under this paragraph.
4. For any year in which Canada' s entitlement to downstream power
benefits is sold in the United States of America, the United
States entity may decide the amount of the downstream power
benefits for purposes connected with the disposition thereof in
the United States of America. This authorization, however, shall
not affect the rights or relieve the obligations of the Canadian
and United States entities relating to joint activities under the
provisions of Article XIV and Annexes A and B of the Treaty;
nor, shall it apply to determination of Compensation provided for
in paragraph A. 1 (c) and paragraph B. 2 of this Attachment.
5. If necessary to accomplish the sale of Canada's entitlement to
downstream power benefits in accordance with this Attachment,
the United States entity shall assure unconditionally the delivery
to or for the account of the Purchaser, by appropriate exchange
contracts, of an amount of power agreed between the United
States entity and the Purchaser to be the equivalent of the
entitlement during the period of the sale.
C. Canada shall designate the British Columbia Hydro and Power
Authority as the Canadian entity for the purposes of Article XIV ( 1 )
of the Treaty.
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