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Appendix D - BC Hydro - Transmission

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service, (i) Interconnection Customer Breaches the covenants contained inArticle 5.17.2, (ii) a "disqualification event" occurs within the meaning of IRSNotice 88-129, or (iii) this LGIA terminates and <strong>Transmission</strong> Provider retainsownership of the Interconnection Facilities and Network Upgrades,Interconnection Customer shall pay a tax gross-up for the cost consequences ofany current tax liability imposed on <strong>Transmission</strong> Provider, calculated usingthe methodology described in Article 5.17.4 and in accordance with IRSNotice 90-60.5.17.7 Contests. In the event any Governmental Authority determines that<strong>Transmission</strong> Provider's receipt of payments or property constitutes incomethat is subject to taxation, <strong>Transmission</strong> Provider shall notify InterconnectionCustomer, in writing, within thirty (30) Calendar Days of receiving notificationof such determination by a Governmental Authority. Upon the timely writtenrequest by Interconnection Customer and at Interconnection Customer’s soleexpense, <strong>Transmission</strong> Provider may appeal, protest, seek abatement of, orotherwise oppose such determination. Upon Interconnection Customer'swritten request and sole expense, <strong>Transmission</strong> Provider may file a claim forrefund with respect to any taxes paid under this Article 5.17, whether or not ithas received such a determination. <strong>Transmission</strong> Provider reserves the right tomake all decisions with regard to the prosecution of such appeal, protest,abatement or other contest, including the selection of counsel and compromiseor settlement of the claim, but <strong>Transmission</strong> Provider shall keepInterconnection Customer informed, shall consider in good faith suggestionsfrom Interconnection Customer about the conduct of the contest, and shallreasonably permit Interconnection Customer or an Interconnection Customerrepresentative to attend contest proceedings.Interconnection Customer shall pay to <strong>Transmission</strong> Provider on a periodicbasis, as invoiced by <strong>Transmission</strong> Provider, <strong>Transmission</strong> Provider'sdocumented reasonable costs of prosecuting such appeal, protest, abatement orother contest. At any time during the contest, <strong>Transmission</strong> Provider mayagree to a settlement either with Interconnection Customer’s consent or afterobtaining written advice from nationally-recognized tax counsel, selected by<strong>Transmission</strong> Provider, but reasonably acceptable to InterconnectionCustomer, that the proposed settlement represents a reasonable settlementgiven the hazards of litigation. Interconnection Customer's obligation shall bebased on the amount of the settlement agreed to by Interconnection Customer,or if a higher amount, so much of the settlement that is supported by thewritten advice from nationally-recognized tax counsel selected under the termsof the preceding sentence. Any settlement without Interconnection Customer'sconsent or such written advice will relieve Interconnection Customer from anyobligation to indemnify <strong>Transmission</strong> Provider for the tax at issue in thecontest.5.17.8 Refund. In the event that (a) a private letter ruling is issued to <strong>Transmission</strong>Provider which holds that any amount paid or the value of any property- 27 -DM_VAN/<strong>BC</strong>T0007-<strong>BC</strong>T00129/6206155.10

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