2010 Arizona Revised Statutes
Title 45 - Waters
45-1708 Contracts

45-1708. Contracts

A. The director may enter into and carry out contracts with water users for the delivery of Colorado river water through the facilities of the central Arizona project and for the sale and delivery of water from other sources included in the central Arizona project or other water projects, if any, hereafter included in the state water and power plan. The director shall provide in all contracts executed for the delivery of water from the central Arizona project that such contracts shall be subordinate to the satisfaction of all existing contracts between the United States secretary of the interior and users in Arizona heretofore made pursuant to the Boulder canyon project act. It may be required as a condition in any contract under which water is provided from the central Arizona project that the contractor agree to accept main stream water of the Colorado river in exchange for or in replacement of existing supplies from sources other than the main stream. Water which has been developed, stored or appropriated shall be sold only at wholesale rates which will not be unreasonably discriminatory for the same.

B. The authority may enter into and carry out contracts for the sale and transmission of power from power projects included in the state water and power plan. Notwithstanding the provisions of title 30, chapter 1, articles 2, 3 and 4, the power from such power projects included in the state water and power plan shall be sold at wholesale only to such power purchasers, located within or without the state, in such manner and upon such terms and conditions, as shall be determined by the authority to be necessary or advisable to effectuate the purposes of this article, except that power and energy of the authority from the Hoover power plant modifications project and Hoover power plant uprating project shall be sold to power purchasers within this state. Any public utility providing electrical service and any district organized to provide electrical service may enter into such contracts with the authority for the sale and transmission of power and energy by which such public utility or district is obligated to make payments in amounts which shall be sufficient to enable the authority to meet all its costs allocable thereto, including interest and principal payments, whether at maturity or upon sinking fund or other mandatory redemption, for its bonds or notes, reasonable reserves for debt service, operation and maintenance expenses and amounts to pay for renewals, replacements and improvements and to meet the requirements of any rate covenant with respect to debt service coverage and any other amounts required for reserves or other purposes, all as shall be provided in the resolution, trust indenture or other security instrument of the authority; except that nontax-exempt public utilities shall be granted an option to purchase the maximum amount of said capacity permitted by federal regulations governing the issuance of tax-free bonds. Such contracts may contain such other terms and conditions as the authority and such public utility or district may determine, including provisions by which the public utility or district is obligated to pay for power irrespective of whether energy is produced or delivered to it or whether any project contemplated by any such agreement is completed, operable or operating, and notwithstanding suspension, interruption, interference, reduction or curtailment of the output of such project.

C. The surplus revenues derived by the director from the central Arizona project and any other water project and by the authority from any power project shall be paid into the state water and power development fund in the amounts and in the manner and at the times specified in an agreement which shall be entered into by the authority and the director prior to the issuance of any bonds or notes. For this purpose, surplus revenues shall mean the revenues of any such project remaining after payment therefrom of operating and maintenance expenses of such project, debt service with respect to bonds and notes issued for such project, payments for renewals and replacements of such project and improvements thereof, any payments required under any license from the United States department of energy with respect to such project and any other charges or liens with respect to such project payable out of such revenues, including in each case reserves therefor, all to the extent required to be paid or provided for under the terms of any resolution or resolutions or trust indenture or indentures authorizing or securing bonds or notes issued for such project or any license from the United States department of energy with respect to such project. Such agreement may also provide for reasonable limitations on the amounts of the necessary operation and maintenance expense for the projects included in the state water and power plan, and it may contain such other terms, conditions and provisions consistent with the provisions of this article as may be necessary or desirable to effectuate the state water and power plan. It is recognized that such agreement will provide additional security for the bonds and notes of the authority and that the same may be pledged by the authority for such purpose.

D. The director or authority may enter into any obligation or contract with the United States necessary or required in carrying out or accomplishing any of the purposes or power authorized or permitted by this article and may conform to such requirements, rules or regulations not otherwise inconsistent with the laws of this state as may be prescribed by the United States in accordance with the acts of Congress applicable thereto now in effect or which may hereafter be adopted and the rules and regulations promulgated thereunder. Contracts or agreements entered into with the United States may contain such terms, conditions, covenants and restrictions for the security of the United States or any subsequent holders of bonds issued to evidence such loans, grants or advances of money. The director or authority may do any and all acts and things considered necessary or advisable by the United States and the director or authority in connection with or additionally to secure any such loans, grants or advances of money or issuance or sale of bonds provided for in the contract or agreement with the United States.