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I Arizona Public Service Company vi I I I I I I Mr. F. M. Clinton -2- September 26, 1960 ADJUSTMENT : plus the applicable proportionate part of any taxes or govern- mental impositions which are assessed on the basis of gross revenues of the company and/or the price or revenue from electric energy sold and/or the volume of energy generated or purchased for sale a~d/or sold hereunder. NOTE: Exhibits I and II respectively, show how the annual Kwm and megawatts are derived from the August 31, 1960 schedule to which wheeling is applicable annually. I I I I I I I The tax presently applicable is 0.199% State Regulatory Assessment. We are advised by legal counsel that at this time no state sales or use tax is applicable to these wheeling transactions. Our wheeling quotation includes all taxes for local, state, and fed- eral government. including income taxes .and represent in total ap- proximately 20% of the gross revenue received. When making comparison of your wheeling expense with our quotation your total wheeling expense should include an allowance for taxes foregone on the part of the government. The facilities to be provided by the company for wmeeling the power under our quotation consist of 3 . 230 kv lines from Glen Canyon to Phoenix (Cave Creek) via Flagstaff, Arizona, with associated 230 kv terminal equipment. These new facilities prOVide interconnections to existing 230 kv systems at Flagstaff and Phoenix. At Four Corners the U.S.B.R. would furnish 230 kv terminal equipment necessary to interconnect with the company 230 kv facility at Four Corners power plant. I I I I I These combined facilities provide interconnection with all the exist- ing systems in Arizona and Four Corners power plant for exchange of power and emergency assistance. and we believe will meet the needs for temporary increases in the schedule for short periods of time dur- ing 1966 through 1970, that were given over the telephone and discussed by Mr. CUDlDings after receiving the August 31, 1960 schedule. We assume that when our wheeling quotations are compared and measured by the yardstick. that the yardstick system will be comparable in performance and ability to our system, and will deliver power and energy at the points of delivery as per the August 31, 1960 schedule. This proposal is, of course, contingent upon obtaining the necessary approval of regulatory authorities having jurisdiction, and accept- able contract form.