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WATER PURCHASE AGREEMENTBETWEENLOUISVILLE WATER COMPANYANDHARDIN COUNTYWATER DISTRICT No. 2KENTUCKYPUBLIC SERVICE COMMISSIONTalina R. MathewsMARCH 19, 2013EXECUTIVE DIRECTOREFFECTIVE5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)
TABLE OF CONTENTSWATER PURCHASE AGREEMENTPage1. Quantity of Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22. Extraordinary Circumstances. . . . . . . . .43. Quality of Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44. Point of Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55. Pressure at the Point of Delivery. . . . . . . . . . . . . . . . . . . . . . . . .56. Master Meter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57. Meter Testing and Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . .68. Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79. Future Rate Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .710. Advance Notice of Rate Modification . . . . . . . . . . . . . . . . . . . . . .711. Annual Meeting . · 812. L WC Service Rules and Regulations . . . . . . . . . . . . . . . . . . . . . .813. Warranties Provided by HCWD2 . . . . . . . . . . . . . . . . . . . . . . . .814. Warranties Provided by LWC . . . . . . . . . . . . . . . . . . . . . . . . . . . .815. PSC Review and Effective Date . . . . . . . . . . . . . . . . . . . . . . . . .916. Term and Termination of Agreement . . . . . . . . . . . . . . . . . . . . .917. Authorization to Enter Into Agreement . . . . . . . . . . . . . . . . . .1018. Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1119. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1120. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11KENTUCKY21. Notices. . . . . . . . . . . . . . . PUBLIC. . . . . .SERVICE. . . . COMMISSION11Talina R. Mathews22. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . .EXECUTIVE. . . . . . DIRECTOR1223. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12EFFECTIVE5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)
WATER PURCHASE AGREEMENTThis Water Purchase Agreement (the "Agreement") is entered into asof the 19th day of March 2013, by and between:LOUISVILLE WATER COMPANYA Municipally Owned CorporationGoverned by the Board of Water WorksPursuant to KRS 96.230 through 96.310550 South Third StreetLouisville, KY 40202("LWC")HARDIN COUNTY WATER DISTRICT NO. 2A Water DistrictGoverned by a Board of CommissionersPursuant to KRS Chapter 74P.O. Box 970360 Ring RoadElizabethtown, KY 42702("HCWD2")AndWITNESSETH:WHEREAS, Louisville Water Company (the "L WC") has a reservetreatment capacity and desires to sell potable water to Hardin County WaterDistrict No. 2 (the "HCWD2");WHEREAS, HCWD2 continues to expenence a steady customergrowth rate and increased water demand by its customers;WHEREAS, HCWD2 desires to obtain aKENTUCKYPUBLIC SERVICE COMMISSIONsupplementalTalina R.supplyMathewsofEXECUTIVE DIRECTORpotable water;EFFECTIVE5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)-1-
WHEREAS, on April 3, 2008, LWC and HCWD2 executed a Letterof Intent, whereby LWC expressed its intent to provide a supplementalsupply of water to HCWD2 and HCWD2 expressed its intent to purchase asupplemental supply of water from LWC;WHEREAS, L WC has made, and plans to make additional,improvements to its water distribution system to enhance its ability toprovide a supplemental supply of water to HCWD2; andWHEREAS, HCWD2 has made plans to construct a 24-inch diameterductile iron water transmission main, approximately 11 miles in length, fromits existing Elizabethtown Loop transmission main to the proposed Point ofDelivery, hereinafter specified, near the Hardin-Bullitt County Line south ofthe Rolling Fork River.NOW, THEREFORE, in consideration of all the foregoing and theterms and conditions set forth herein, LWC and HCWD2 (the "Parties")agree as follows:1.Quantity of Water.Subject to the limitations and timedeadlines set forth below, LWC shall furnish to HCWD2, at the Point ofKENTUCKYDelivery hereinafter specified, such quantities of waterasSERVICEHCWD2mayPUBLICCOMMISSIONTalina R. Mathewsrequire. LWC shall be obligated to furnish to 2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)-2-
be obligated to purchase from L WC, the following quantities of wateraccording to the following time deadlines and conditions:A.No later than January 1, 2016, L WC shall make availablea capacity of two (2) million gallons per day (MGD);B.No later than January 1, 2016, HCWD2 shall paymonthly to L WC the cost for the actual quantity of waterused, but not less than sixty (60) MG annually;C.No later than January 1, 2017, HCWD2 shall paymonthly to L WC the cost for the actual quantity of waterused, but not less than one hundred twenty (120) MGannually;D.No later than January 1, 2018, HCWD2 shall paymonthly to L WC the cost for the actual quantity of waterused, but not less than one hundred eighty (180) MGannually;E.No later than January 1, 2019, HCWD2 s4all paymonthly to L WC the cost for the actual quantity of waterused, but not less than two hundred forty (240) MGannually;F.No later than January 1, 2020, HCWD2 shall paymonthly to LWC the cost for the actual quantity of waterused, but not less than three hundred (300) MG annually;G.No later than January 1, 2021 , HCWD2 shall paymonthly to L \VC the cost for the actual quantir; of \vaterused, but not less than three hundred sixty-five (365) MGannually;H.No later than January 1, 2021, L WC shall make availableKENTUCKYwhichis a COMMISSIONtotal ofadditional capacity of three (3) MGD,PUBLICSERVICEfive ( 5) MGD; andTalina R. MathewsEXECUTIVE DIRECTORI.L WC agrees to make available additional quantities ofwater beyond five (5) MGD subject to these additionalEFFECTIVEparameters:5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)-3-
2.(1)L WC and HCWD2 will negotiate in good faith thefinancial terms and construction schedule for theprovision of any additional capacity beyond five(5) MGD; and(2)All requests by HCWD2 for additional quantitiesof water shall be formal, written requests made byHCWD2's Chairman and directed to LWC'sPresident & CEO; and the maximum quantity to befurnished by L WC under the terms of thisAgreement is ten (10) MGD.Extraordinary Circumstances.In the event extraordinarycircumstances occur (e.g. an industry agrees to locate in the Glendale ,Megasite and projects a large volume of water consumption) and HCWD2deems it necessary to accelerate the time deadlines outlined in paragraph 1of this Agreement, LWC pledges to use its best efforts to accommodateHCWD2 's increased water demand by expediting delivery of additionalquantities of water. If such an event occurs, HCWD2 pledges to provideL WC with as much advance notice as possible under the circumstances.L WC and HCWD2 agree to negotiate in good faith the financial terms andthe construction schedule for the provision of any additional capacity on anaccelerated schedule.3.Quality of Water. All water furnishedKENTUCKYPUBLIC SERVICE COMMISSIONat the Point of DeliveryTalina R. MathewsEXECUTIVE DIRECTORshall be treated, potable water that complies with all applicable state andfederal regulatory agencies' standards for water quality.EFFECTIVE5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)-4-
4.Point of Delivery. LWC shall construct the necessary facilitiesto enable it to furnish the water at a mutually agreed upon location on thesouth side of the Rolling Fork River near the Hardin-Bullitt County Line(the "Point of Delivery").Once the Point of Delivery location 1sdetermined, the Parties shall prepare a written description of the location. Adocument containing the written description shall be executed by bothParties, designated as the "Point of Delivery Addendum," and made a part ofthe Agreement.5.Pressure at the Point of Delivery. LWC shall deliver thewater to HCWD2 at a minimum hydraulic grade line elevation of 650 feetmean sea level (the "MSL") and a maximum hydraulic grade line elevationof 690 feet MSL at the Point of Delivery. Emergency failures of pressure orfailures of supply due to main breaks, power failure, flood, fires and/or useof water to fight fires, labor unrest, earthquake, tornado and/or otherextraordinary circumstances shall excuse LWC from any failure to complywith this paragraph for such reasonable period of time as may be necessaryto resolve the situation.6.Master Meter. L WC shall install, atKENTUCKYPUBLICSERVICEits own expense, COMMISSIONmasterTalina R. MathewsEXECUTIVE DIRECTORmetering equipment at the Point of Delivery.As future consumptionEFFECTIVE5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)-5-
warrants, the initial master meter will be upsized accordingly. L WC shallown, operate and maintain the master meter and related facilities.7.Meter Testing and Adjustment. L WC shall test the mastermeter located at the Point of Delivery once every year. Additional testingmay be performed by LWC at its sole discretion. L WC shall provide a 24hour notice to HCWD2 prior to conducting any meter tests, allow access tothe metering site during testing, and submit test results to the appropriateofficial or agent designated by HCWD2. A meter registering within theacceptable limits as identified by A WWA standards shall be deemed to beaccurate. A reading of the meter determined by test results to be inaccurate(registering outside of acceptable limits of A WWA standards based upontype of meter) shall cause billings for at least one month, and up to threemonths, previous to such test to be adjusted by the percentage of inaccuracyfound by such test. If any meter shall fail to register usage for any regularbilling period, the amount of water furnished during such billing period shallbe considered to be the same as the amount of water furnished during thecorresponding billing period immediately prior to the failure, unless theKENTUCKYby someparties agree in writing to determine the amount of water furnishedPUBLIC SERVICE COMMISSIONTalina R. MathewsperiodDIRECTORshouldother method. L WC may make adjustments in the next billingEXECUTIVEthe next reading be substantially higher than the previous billing period priorEFFECTIVE5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)-6-
to the one in which usage did not register. An appropriate official or agentdesignated by HCWD2 shall have access to the master meter for the purposeof collecting daily usage data and verifying the meter's readings.8.Rates.L WC agrees to charge and HCWD2 agrees to payLWC's standard wholesale water rate that is in effect at the time waterservice is commenced (currently 2.05 per thousand gallons, as identified inthe Board of Water Works 2013 Rate Schedule). In addition, HCWD2 shallpay a flat monthly service charge fee based upon the requested capacity ofthe master meter. The Parties further agree and acknowledge that L WC'swholesale water rate and service charge fee will be reviewed and may beadjusted annually by the Board of Water Works.9.Future Rate Increases. Currently, L WC' s standard wholesalerate is based upon a cost-of-service methodology consistent with A WWArate making principles. LWC agrees that any future rate increases will bebased upon its current or similar cost-of-service methodology.10.Advance Notice of Rate Modification.LWC shall notifyHCWD2 in writing of the proposed rate adjustment or modification at leastsixty (60) days before it is to become effective.KENTUCKYPUBLIC SERVICE COMMISSIONThis will provideTalina R. HCWD2MathewsEXECUTIVE DIRECTORsufficient time to review and comment upon, if desired, the proposed rateEFFECTIVE5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)-7-
and to obtain a Purchased Water Adjustment from the Kentucky PublicService Commission (the "PSC").11.Annual Meeting.Commencing in 2013, the President ofL WC, the General Manager of HCWD2, and other representatives of theParties shall meet at least annually to discuss the future water needs ofHCWD2 and other relevant topics. By mutual agreement, the Parties mayaccelerate the time lines set forth in paragraph 1 of this Agreement if demandprojections warrant acceleration.12.L \VC Service Rules and Regulations.The Parties furtheracknowledge and agree that the Board of Water Works Service Rules andRegulations, including anyamendmen sthereto, applicable to wholesalecustomers applies to this Agreement and are incorporated into thisAgreement by reference.13.Warranties Provided by HCWD2. Subject to paragraph 3 ofthis Agreement, HCWD2 covenants and warrants that it shall be responsiblefor any water quality issues that might occur within its distribution system asa result of blending water purchased from LWC with HCWD2 water.14.KENTUCKYPUBLIC SERVICE COMMISSIONTalina R. MathewsEXECUTIVEWarranties Provided by LWC. LWC covenantsand DIRECTORwarrantsthat it will communicate with HCWD2 as soon as L WC becomes aware ofEFFECTIVE5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)-8-
an event within L WC' s system that will result in interruption of service toHCWD2; and, further, that LWC will restore full service to HCWD2 as soonas reasonably possible. In the event of an extended shortage of water or inthe event that the overall supply of water available from L WC is diminishedover an extended period of time, water service to HCWD2 shall be reducedor diminished in the same ratio or proportion as the water service to LWC'sother customers within the same customer class (excepting health servicerelated customers).15.PSC Review and Effective Date. The Parties acknowledgethat this Agreement cannot become effective until it has been reviewed andaccepted for filing by the PSC. L WC shall file an executed copy of thisAgreement with the PSC. HCWD2 pledges its assistance to help expeditethe PSC review process. The Effective Date of thisAgr ementshall be thedate the Agreement is deemed to be "filed" by the PSC. LWC shall givewritten notice of the Effective Date to HCWD2.16.Term and Termination of Agreement.The term of thisAgreement shall extend for a period of approximately fifty (50) years,KENTUCKYSERVICE COMMISSIONcommencing on the Effective Date hereof as provided PUBLICfor in paragraph14 ofTalina R. MathewsEXECUTIVE DIRECTORthis Agreement, and terminating on June 30, 2063, unless otherwiseEFFECTIVEto theextended by written agreement of the Parties or terminated pursuant5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)-9-
terms of this Agreement. Either Party may terminate this Agreement withtwelve ( 12) months advance written notice to the other Party, in the event ofany of the following:A.B.For HCWD2 to terminate:(1)Failure of L WC to meet water delivery requirementsstated herein (except for failures related to the temporaryinterruptions described in paragraphs 5 and 13 ); or(2)Failure of LWC to meet all applicable water qualityrequirements; or(3)The breach by L WC of any other duty, warranty, orcovenant contained in this Agreement.For LWC to terminate:(1)Repeated failure of HCWD2 to pay within forty-five (45)days of the due date for monthly wholesale water servicedescribed in this Agreement; or(2)Final revocation ofHCWD2's authority to op rate a watersystem by one or more governmental authorities havingjurisdiction over such matters; or(3)Repeated failure of HCWD2 to consistently meet allapplicable water quality requirements of the KentuckyDivision of Water resulting in classification of HCWD2as a significant non-complier if such classification causesL WC to be in violation of any drinking waterrequirements; or(4)HCWD2' s breach of any duty, warranty, or covenantcontained in this Agreement; provided, however, L WCcannot exercise such termination right until it has givenHCWD2 written notice of the breach and HCWD2 hasKENTUCKY(60)failed to correct or eliminate such breachsixtyPUBLICwithinSERVICECOMMISSIONdays from receipt of that written notice. Talina R. MathewsEXECUTIVE DIRECTOR17.Authorization to Enter Into Agreement.HCWD2 shallEFFECTIVEby thisobtain any approvals required for the purchase of water contemplated5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)-10-
Agreement, and LWC agrees to cooperate in obtaining any such approvals.HCWD2 affirms that it has the necessary authority to enter into theAgreement.18.Jurisdiction. As a result of Simpson County Water District v.City of Franklin, 872 S. W.2d 460 (Ky. 1994), the Parties acknowledge thatthe PSC has exclusive jurisdiction to resolve disputes concerning "rates andservice" which may arise under this Agreement. Any other dispute arisingunder this Agreement shall be filed and be heard in the Circuit Court ofJefferson County, Kentucky.19.Waiver. Neither L WC's failure nor HCWD2's failure to assertits respective rights under any provision or term of this Agreement shall beconstrued as a waiver of that right or any other right at any time in thefuture.20.Assignment. The Parties agree that this Agreement shall not beassigned without the prior, written consent of the other Party, such consentnot to be unreasonably withheld.21.KENTUCKYNotices. All notices required under the AgreementshallCOMMISSIONbe inPUBLIC SERVICETalina R. MathewsEXECUTIVE DIRECTORwriting addressed as follows and sent Certified Mail, Return ReceiptRequested:EFFECTIVE5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)-11-
22.Ifto LWC:President & CEOLouisville Water Company550 S. Third StreetLouisville, KY 40202IftoHCWD2:ChairmanHardin County Water District No. 2P.O. Box 970Elizabethtown, KY 42702Severability of Provisions. Should any provision or paragraphm this Agreement be held to be invalid or unlawful, the remainingprovisions or paragraphs in this Agreement shall be fully enforceable andshall remain in full effect.23.Entfre Agreement.This Agreement represents the entireagreement by the Parties regarding wholesale water sales by· L WC toHCWD2.[Remainder of this page intentionally left blank][Signature page to follow]KENTUCKYPUBLIC SERVICE COMMISSIONTalina R. MathewsEXECUTIVE DIRECTOREFFECTIVE5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)-12-
IN TESTIMONY WHEREOF, witness the signatures of the Parties bytheir duly authorized officers (as evidenced by resolutions of their respectivegoverning boards) as of the day and year first above written, it beingunderstood and agreed that this Agreement may be executed in two or morecounterparts, each of which shall be deemed an original but all of whichtogether will constitute one and the ame instrument.For theFor theLOUISVILLE WATER COMPANYHARDIN COUNTY WATERDISTRICT No. 2A andForm:Damon R. TalleyAttorney for HCWD2Barbara K. DickensVice President, General CounselKENTUCKYPUBLIC SERVICE COMMISSIONTalina R. MathewsEXECUTIVE DIRECTOREFFECTIVE5/13/2016PURSUANT TO 807 KAR 5:011 SECTION 9 (1)-13-
water purchase agreement between louisville water company and hardin county water district no. 2 march 19, 2013 kentucky public service commission talina r. mathews executive director effective 5/13/2016 pursuant to 807 kar 5:011 section 9 (1)
