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Appendix D - BC Hydro - Transmission

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epresentation in clause (iii), above. <strong>Transmission</strong> Provider represents andcovenants that the cost of <strong>Transmission</strong> Provider's Interconnection Facilitiespaid for by Interconnection Customer will have no net effect on the base uponwhich rates are determined.5.17 5.17.3 Indemnification for the Cost Consequences of Current Tax Liability ImposedUpon the <strong>Transmission</strong> ProviderTax Indemnity. Notwithstanding Article 5.17.1,Interconnection Customer shall protect, indemnify and hold harmless <strong>Transmission</strong>Provider from the cost consequences of any current tax liability imposed against<strong>Transmission</strong> Provider as thea result of payments or property transfers made byInterconnection Customer to <strong>Transmission</strong> Provider under this LGIA for InterconnectionFacilitiesSGIA, as well as any interest and penalties, other than interest and penaltiesattributable to any delay caused by <strong>Transmission</strong> Provider.<strong>Transmission</strong> Provider shall not include a gross-up for the cost consequencesof any current tax liability in the amounts it charges Interconnection Customerunder this LGIA unless (i) <strong>Transmission</strong> Provider has determined, in goodfaith, that the payments or property transfers made by InterconnectionCustomer to <strong>Transmission</strong> Provider should be reported as income subject totaxation or (ii) any Governmental Authority directs <strong>Transmission</strong> Provider toreport payments or property as income subject to taxation; provided, however,that <strong>Transmission</strong> Provider may require Interconnection Customer to providesecurity for Interconnection Facilities, in a form reasonably acceptable to<strong>Transmission</strong> Provider (such as a parental guarantee or a letter of credit), in anamount equal to the cost consequences of any current tax liability under thisArticle 5.17. Interconnection Customer shall reimburse <strong>Transmission</strong> Providerfor such costs on a fully grossed-up basis, in accordance with Article 5.17.4,within thirty (30) Calendar Days of receiving written notification from<strong>Transmission</strong> Provider of the amount due, including detail about how theamount was calculated.The indemnification obligation shall terminate at the earlier of (1) theexpiration of the ten year testing period, and the applicable statute oflimitation, as it may be extended by <strong>Transmission</strong> Provider upon request of theIRS, to keep these years open for audit or adjustment, or (2) the occurrence ofa subsequent taxable event and the payment of any related indemnificationobligations as contemplated by this Article 5.17.5.17.4 Tax Gross-Up Amount. Interconnection Customer's liability for the costconsequences of any current tax liability under this Article 5.17 shall becalculated on a fully grossed-up basis. Except as may otherwise be agreed toby the parties, this means that Interconnection Customer will pay <strong>Transmission</strong>Provider, in addition to the amount paid for the Interconnection Facilities andNetwork Upgrades, an amount equal to (1) the current taxes imposed on<strong>Transmission</strong> Provider ("Current Taxes") on the excess of (a) the gross incomerealized by <strong>Transmission</strong> Provider as a result of payments or property transfersmade by Interconnection Customer to <strong>Transmission</strong> Provider under this LGIA- 25 -DM_VAN/<strong>BC</strong>T0007-<strong>BC</strong>T00129/6206155.10

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