Public Utility District No 1 of Snohomish Co 12/6/2017 Amendment

requirements set forth in adopted and applicable codes or regulations, the Facility may simply fail to an extent it can no longer perform its intended function, or it may become so inefficient that it is more cost effective to replace). Level of Service criteria is typically determined for a specific project element by manufacturer's performance data, an industry standard, or agreement of the Parties. Maintenance: An action (other than Administrative,Insurance, Construction, or Operation) intended to keep a Facility or Component in a state to perform its required functionality, such as to continue the reliable delivery of water, prevent Level of Service failure, and/or keep in a state of effectiveness or efficiency. Maintenance includes inspections, tests, measurements, replacements, adjustments, or repairs. Maintenance shall include replacement of a Facility, Component, or portion thereof when replacement costs less than $50,000 (in 2017 dollars, adjusted annually for inflation) and is less expensive than repair. Non-Routine Maintenance or Non-Routine Administrative: Any eligible Maintenance or Administrative action that is not anticipated to occur more than once in the current 5 year summary period. Normalized historical annual costs: The mean of the normalized annual costs for the previous five-year period. Normalized annual costs shall be calculated using the actual annual cost for each of the previous five calendar years adjusted to present year dollars based on the Specified Index: Provided that each Non- Routine Maintenance and/or Non-Routine Administrative action estimated to cost more than $5000 will not be included in such calculation. Operation: Action (other than Maintenance,Administrative, Insurance, or Construction) to control Project Facilities, Components, or portions thereof to effect the delivery of water. Specified Index: The Handy-Whitman Index, Cost Trends for Utility Construction, Pacific Region, Hydro Production Plant, for Reservoirs, Dam, and Waterways—FERC Code 332 (HWI). All calculations shall be based on the latest versions of the HWI available on or after April 1 when the January 1 HWI indices are published. If the January index is not available, the HWI index for the most recent preceding period shall be used as the basis for adjustment. If no HWI indices have been published for those periods, the Parties shall agree upon substitute data. If the HWI publication is discontinued, the Parties shall agree upon an appropriate substitute index. HWI can be obtained from District's insurance underwriter or other appropriate source. Value: The determination by agreement of the Parties that an action or asset substantially aids or increases the reliability or output of the Project for City water supply or District hydroelectric purposes, or both. 2017 Amended Agreement(Henry M.Jackson Hydroelectric Project) Page 4