AGREEMENT BY AND BETWEEN

POTOMAC ELECTRIC POWER COMPANY

AND

WASHINGTON METROPOLITAN AREA TRANSI" AUTHORITY

THIS AGREEMENT, entered into this

day

1975 by and between POTOMAC ELECTRIC POWER COMPANY (Utility), a District of Columbia and Virginia corporation also authorized to do business in the State of Marylani, whose principal place of business is 1900 Pennsylvania Avenue, N. W., Washington, D. C., and the WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY (Authority).

WITNESS:

WHEREAS, Authority is established by Interstate Compact by and between Maryland, Virginia, and the District of Columbia, pursuant to Public Law 89-774 (Law), an Act to grant the consent of Congress to the establishment of an organization empowered to provide transit facilities in the National Capital Region; and

WHEREAS, Authority will construct and onerate or cause to be operated the Washington Area Transit System (System) in the District of Columbia; Montgomery and Prince George's Counties, Maryland; Arlington and Fairfax Counties, Virginia; and the cities of Alexandria, Falls Church and Fairfax, Virginia (Zone); and

WHEREAS, Utility is an electric public utility, the present exclusive Service Area of which for the retail sale of electric energy is the District of Columbia, major portions of Montgomery and Prince George's Counties, Maryland and a small segment of Arlington County, Virginia (all as shown by the man attached hereto as Appendix A and expressly made a part hereof); and

WHEREAS, Utility is regulated by the Public Service Commissions of the District of Columbia and Maryland and the State Corporation Commission of Virginia as to rates and service for the sale of electricity at retail; and

WHEREAS, Authority is currently constructing and will operate a rapid transit System to serve the Washington Metropolitan Area (as shown by the man attached hereto as Annendix B and expressly made a part hereof), all or a nortion of such Area lying within Utility's Service Area; and Authority desires to purchase all electricity from Utility to onerate and maintain the rapid transit System within Utility's Service Area; and Utility desires to sell all electricity to Authority for that purpose;

NOW, THEREFORE, Utility and Authority expressly recognizing the foregoing further state and agree as follows:

I

A. "Authority's System" means the rapid rail transit system, approximately 98 miles in length, a man of which is attached hereto as Appendix B, which Authority is currently constructing.

B. "Authority Project" means the various portions of the Authority's System which are to be identified by Authority during the construction of the Authority's System.

C. "Utility Project" means the specific construction, including rearrangements and/or renoval by the Utility, including but not limited to, wire, cables, conduits, manholes, transformers, meters, and other electric equipment that will be required to supply electricity to the Authority Projects.

D. "Periodic Payments of the Estimated Contributions in Aid of Construction" means payments in cash for Utility Project construction, calculated and made as more specifically agreed, according to Section III, infra.

E. "Contributions in Aid of Construction" means contributions in cash for construction nurposes, as defined in Electric Plant Instructions of the Uniform System of Accounts of the Federal Power Commission and adopted by the Regulatory Commissions. Contributions in Aid of Construction shall conform to the Utility's General Terms and Conditions for construction in connection with the sale and distribution of all electricity for any use, and shall in any event be calculated and paid as more specifically agreed, according to Section III, infra.

F. "Technical Provisions" means the technical criteria of the Authority's Projects as applicable to Utility Projects which will supply electricity to Authority's System; a copy of the Technical Provisions is attached hereto as Appendix C and is expressly made a part hereof.

G. "Estimated Cost" of Contribution in Aid of Construction means all direct costs of and indirect costs reasonably allocable to Utility Projects properly chargeable to the appropriate accounts in accordance with the Uniform System of Accounts of the Federal Power Commission. These costs, as determined by Utility's Standard Accounting and Estimating Practices, shall include all overhead costs not chargeable directly to accounts pertaining to construction of Utility Projects and which are determined on the basis of a rate or percentum factor supported by overhead bearing accounts in accordance with Utility's Standard Accounting Practices.

H. "Actual Cost" of Contributions in Aid of Construction reans all direct costs of and indirect costs reasonably allocable

to construction of Utility Projects properly chargeable to the various appropriate accounts in accordance with the Uniforn System of Accounts of the Federal Pover Commission. These costs as determined by Utility's Standard Accounting and Estimating Practices, without any element of profit to Utility, shall include all overhead costs not chargeable directly to accounts pertaining to Utility Projects and which are determined on the basis of a rate or percentum factor supported by overhead bearing accounts in accordance with Utility's Standard Accounting Practices.

I. "Service Area" means all the territory of the District of Columbia and all that portion of Montgomery County and Prince George's County, Maryland and Arlington County, Virginia designated as such according to the man attached hereto as Appendix A, and any territorial addition thereto as hereafter may be made by Utility.

J. "Regulatory Commissions" means the District of Columbia Public Service Commission, the Maryland Public Service Commission, the Virginia State Corporation Commission, and the successors of each or any.

K. "Rate Schedule RT" means Utility's Rapid Transit Rate Schedule "(RT)" as filed by Utility with the appropriate Regulatory Commissions.

"Utility's Standard Estimating Practices" and "Utility's Standard Accounting Practices" shall he such practices as are applied by Utility in administering its other construction programs at the time Fstimated Costs are deterrined and Actual Costs are incurred.

IT

RATES AND SERVICE

A.

Utility shall sell to Authority and Authority shall purchase from Utility pursuant to Panid Transit Rate Schedule (RT) all electricity used by Authority in Utility's Service Area, excent electricity generated by Authority for emergency operations, at primary voltare on contiguous authority right of way at the points of delivery and metering as listed in Appendix D attached hereto and expressly made a part hereof, provided however that delivery at secondary voltare shall be separately metered and billed under Utility's generally annlicable rate schedule(s). Authority arrees to purchase in Utility Service Area all electricity from Utility pursuant to Utility's General Terms and Conditions, and Electric Service Rules and Regulations, all as from time to time effective in each jurisdiction within which Utility operates, not specifically modified herein. For a period of two years or until the Virginia State Corporation Commission assumes direct rerulation over

utility rates to rovernmental bodies, whichever shall occur first, the rate schedule PT annlicable to Authority in the District of Columbia shall apply to comparable sales of electricity to Authority in Virginia. Authority shall for the period of this Contract use electricity as its only source of traction power in Utility's Service Area except for diesel nowered locomotives used for switching and in emergency operations.

B. The Utility will conduct a cost of service study as applicable to the Authority as a separate customer class. Based upon the results of the cost of service study (reflecting criteria and a fair rate of return for Utility, made applicable by the appropriate Regulatory Commission), Utility will establish a rail rapid transit rate schedule for application to the Utility's primary electric service delivered to the Authority's rail rapid transit system on contiguous Authority right of way.

ΤΤΙ

PAYMENTS FOR UTILITY PROJECT CONSTRUCTION

A. Pursuant to Utility's General Terms and Conditions on file with and approved by the applicable Regulatory Commissions and in addition as agreed herein, Authority agrees to make Contributions in Aid of Construction of Utility Projects calculated as follows:

1. Upon Authority's determination that an Authority Project is identifiable to the extent required to enable Utility to design electric service facilities as part of corresponding Utility Projects, Authority will so notify Utility in writing accompanied by such information as is reasonably required by Utility.

'2.

Upon receipt of such notification and information, Utility will proceed immediately to estimate by Authority Project, within a reasonable period of time and using Utility's Standard Accounting and Estimating Practices: (a) the estimated cost of constructing the Utility Profects pursuant to Utility's standard construction practice as if there were no Technical Provisions applicable, and (b) the estimated cost of constructing the Utility Projects pursuant to Itility's standard construction practice but in accordance with the Technical Provisions. The difference in these estimated costs will be the Estimated Cost of Contribution in Aid of Construction. (See example, Annendix P).

3. The Utility will make these estimates in accordance with standards of engineering and materials not exceeding the standards utilized in the performance of work otherwise conducted by Utility excent where necessary to meet the Technical Provisions.

Unon acceptance by the Authority of the calculation

of the Estimated Cost of Contribution in Aid of Construction specified

by Utility, Utility will prepare a plan of detailed engineering and construction work and estimated completion dates as necessary to construct and complete the Utility Projects. These plans will be the source of a pair of "S" curves which will be used as the basis of the Periodic Payment of the Estimated Cost of Contribution in Ald of Construction by Authority (these curves as developed, one set for each Authority Project, shall be attached hereto as Appendix F, expressly made a part hereof). For cach Authority Project, the engineering "S" curve will begin prior to the construction "S" curve, and it will likewise terminate earlier. Payments, comprised of the sum of the appropriate amounts from the two curves, will be made on a monthly basis, the first payment made at the end of the first month following the start of the engineering, "S" curve if Authority's acceptance of the calculation of the Estimated Cost of Contribution in Aid of Construction is later than the date of the beginning of the engineering "S" curve, the first payment shall consist of all amounts owed to that date as determined by the engineering "S" curve.

5. Utility reserves the right to re-estimate by Utility Project periodically any Estimated Cost of Contribution in Aid of Construction or nart thereof which was originally estimated pursuant to 2. above, and the re-Estimated Cost of Contribution in Aid of Construction, or part thereof, shall be paid according to the same "S" Curve as prepared pursuant to 4. above, for payment of the Estimated Cost of Contribution in Aid of Construction as originally estimated.

6. At the completion of each Authority Project, Utility will submit to Authority the Actual Cost incurred by Utility for the Utility Projects within the Authority Project, and payment will be made as required to adjust the Estimated Cost of Contribution in Aid of Construction to the Actual Cost, and the resulting amount will be the Actual Cost of Contribution in Aid of Construction for the Authority Projects (see Appendix F).

B. Subject to the terms hereof, Utility agrees to construct or cause to be constructed all Utility Projects reasonably required to distribute all electricity to Authority for the purpose of operation of a ranld transit system. Utility will utilize its own personnel, sustaining or non-sustaining contractors, or any mix thereof, as it deems appropriate, in accordance with the standard procedure then being used by Utility in performing such work generally. Utility will make no change in the design of Utility Projects which will increase the Estimated Cost of Contribution in Aid of Construction as accepted pursuant to Section III, Paragraph A.4, without approval of Authority.

C. Changes: In the event Authority changes an Authority Project or a Utility Project after notification to Utility and after Utility has incurred cost in complying with the Project as issued or approved, Utility shall conform to the changed Project